‘Warning: Stamp Duty planning is not suitable for everyone. We are not promoters of any particular SDLT planning scheme and do not offer tax advice. If you have any doubts about this planning, you should not pursue SDLT planning.’
There are a number of Stamp Duty Land Tax (SDLT) mitigation schemes and planning strategies starting with residential and commercial property purchases of over £500,000.
The planning is for individuals and corporates purchasing residential property and commercial property over £500,000. Stamp Duty or SDLT on 100% of the purchase price is not charged based on advice from Tax Counsel.
There are no upper limits on property value. This gives a great deal of scope for savings on high value property transactions. The strategy allows our client’s to make a substantial savings on the stamp duty payable. The tax paid is Nil and the fee is based upon a percentage of the property value. See below:
As the chances of HMRC successfully arguing against the planning are low, an insurer is willing to back its success and insure the fees. Accordingly, an insurance policy has been put in place while the cover is not compulsory but is strongly recommended. The insurance returns the set up fees and costs if our tax counsel advises settlement (i.e. HMRC successfully argue that tax is due). Full details of the cover and instructions of how to put it in place will be provided at the time of engagement. It effectively means by taking the insurance, if the planning is unsuccessful, you will be only liable for the interest for late payment and the Stamp Duty itself to pay.
Am I suitable?
- Are you comfortable with the fact that HMRC may challenge the transaction?
- Are you prepared to rely on an insurance policy to repay your set up fees?
- Are you prepared to pay the tax if unsuccessful?
- Are you prepared to risk retrospective application of law, no matter how slight a chance it can never be ruled out or insured against?
The Fees
The fees are based upon a % of the property value:
£500,000 to £5m - 1.8%
The next £5m to £10m - 1%
The next £10m to £50m - 0.75%
Thereafter by agreement.
£500,000 to £5m - 1.8% The next £5m to £10m - 1% The next £10m to £50m - 0.75% Thereafter by agreement.| No Strategy | With Stamp Duty Strategy |
| £1,000,000 residential purchase |
£1,000,000 residential purchase |
| Stamp Duty @ 5% |
Fee @ 1.8% of property value + additional legal fees |
| £50,000 paid in stamp duty |
£18,000 paid in Fee |
| £32,000 stamp duty saved |
Why use this structure?
The planning allows the client to raise mortgage funds in his own name and the structure does not dictate ownership.
Spreading the Risk
By taking out insurance available under the scheme you effectively have passed the risk to the insurer who is commercially comfortable with the risk involved in the planning. Therefore leaving you only to pay interest for late payment and the tax itself if the SDLT mitigation is in the unlikely event not successful.
Counsel’s Opinion
The mere fact of taking Counsel’s advice, assuming Counsel advises that the proposed approach is legal, means that the client cannot be committing tax fraud. However, holding a Counsel’s opinion does not necessarily mean that the tax planning is guaranteed to succeed. Counsel has simply expressed his view that, on the balance of probabilities, the proposed planning should succeed before the court if challenged.
Disclaimer
This document has been prepared for general information only and does not constitute professional advice. Prospective clients should not act on the information contained in this publication without obtaining specific professional advice.
Spreading the Risk
By taking out insurance available under the scheme you effectively have passed the risk to the insurer who is commercially comfortable with the risk involved in the planning. Therefore leaving you only to pay interest for late payment and the tax itself if the SDLT mitigation is in the unlikely event not successful.
Counsel’s Opinion
The mere fact of taking Counsel’s advice, assuming Counsel advises that the proposed approach is legal, means that the client cannot be committing tax fraud. However, holding a Counsel’s opinion does not necessarily mean that the tax planning is guaranteed to succeed. Counsel has simply expressed his view that, on the balance of probabilities, the proposed planning should succeed before the court if challenged.
Disclaimer
This document has been prepared for general information only and does not constitute professional advice. Prospective clients should not act on the information contained in this publication without obtaining specific professional advice.
