SDLT Mitigation schemes.......buy cheap, buy twice!

[dave_s13]

Andehh said:

I would advise getting all paperwork together and in order. Reading the letter they sent us when I enquired about the schene they make it explicitly clear it is fully legal and not an issue from a fraud/avoidance point of view. They also explain they are professionally positioned to advice, though other lesser & riskier schemes are avaliable. I would plead that.

Happy to provide you a copy if you so require!

If you could do that I'd be very grateful. All I have is the email correspondence and it isn't crystal clear what went one. In fact the whole deal was done via email as far as I remember.

Is what you have in paper format or electronic. I'll send you a PM if that's ok.

[Andehh]

Sent the letter to you mate. It really stresses it is legal, above board, and low risk. I don't see how you can be held accountable for accepting their advice seeing as they are qualified professionals.

Will copy and paste extracts here tomorrow when I'm off the mobile.

[Muncher]

The SDLT form states it is the taxpayer's responsibility to check it is correct and to sign it off. It would be interesting to see what was on the form.

[Andehh]

Muncher said:

The SDLT form states it is the taxpayer's responsibility to check it is correct and to sign it off. It would be interesting to see what was on the form.

Yeah, but when their opening letter states the following, it makes it seem like pretty a solid scheme advised by professionals in the know....

''Tax avoidance in general is a legitimate way of mitigating one’s tax liability by utilising the tax
regime to one’s advantage. It can be used to reduce any tax that is payable or altogether avoid it.
It is not an illegal activity as long as it is done within the constraints of the law. The professions
which are involved in marketing and implementing tax avoidance schemes generally are
barristers, chartered tax accountants and of course solicitors. It is part of the services which these
professions provide and we are of course no different.

We consider our role as your professional advisor is to advise you of the options available to you
in any given circumstance and to give you the required information in order for you to make an
informed decision as to whether you wish to proceed w ith a particular course of action.
To put this into context, the first question that has to be answered is whether we are acting with
integrity. Our view is that we are because what we are advising is within the law and is a
legitimate way of mitigating the tax that you may be liable to pay. ''


What annoys me is had I not had 3 solicitors within the family, I would have been sorely tempted to go with the scheme, They sold it very strongly, and really did emphasis the 'sure thing' factor from professional, legal, advisers. Raj Ali (ARC property//Abode Solicitors head) - who was named as the guy to address all further correspondents to had better me getting a damn good hiding for all of this!

Edited by Andehh on Wednesday 18th December 18:42

[Muncher]

Was there any explanation of what the scheme was, how it would be structured and what their fee would be?

[dave_s13]

Muncher said:

Was there any explanation of what the scheme was, how it would be structured and what their fee would be?

Their fee was 50% of the SDLT total +VAT

In my case this amounted to circa £900.

Essentially you paid the full SDLT value to the solicitors, they implemented the scheme and then credited back the difference.

The only answer to this issue is that at some point it's very likely the HMRC will want the SDLT to be paid if hasn't been already. They are very likely to chase me for this. The mitigating factor is the fact that I trusted a professional, offering a seemingly professional service to operate within the law. Mr Ali has obviously had some difficulty with this and landed me, an entirely lay person (and likely several others) right in it, whilst at the same time pocketing some serious cash.

I'm hopeful that I may be in a position to claim back the fee paid using the SRA compensation scheme which will go a long way to offset the total SDLT owed. I'm not going to complain about having to pay it, I'd just rather not piss £900 down the bog in support of Mr Ali's luxury lifestyle.

[ShortShift811]

Commiserations OP; not a nice position to find yourself in.

I would echo the advice of getting all your paperwork in order and having a robust response ready, including all mitigating circumstances and details of how the avoidance scheme was 'sold' to you.

You might find it useful to know that solicitors carry Professional Indemnity Insurance (for claims against them due to negligence) for this very reason. Even after they have closed down, the SRA insists they carry run-off PII for a period of 6 years, and the insurer is obliged to provide this even if the firm in question hasn't paid the premium.

There are specific pages explaining the insurance a Solicitors has to carry on both the SRA and Law Society websites.

It looks like a claim against the firm's PII might be your only recompense, even if you have to settle the HMRC bill in the first instance.

Usual caveat applies; I am not a lawyer etc. (I work in a related area and have seen similar circumstances before).

Hope you get the best possible resolution.

[Mr GrimNasty]

The authorities have had a lot of success in the courts with this, and a lot of money is involved, so it is an easy win.
It depends where you read but they can come after you 4-6 years after purchase, 21 years if really naughty.
You will have no choice but to pay full SDLT+interest. Fines are possible but less likely in your case.

[Andehh]

Bump; any update on how this ended?

[dave_s13]

Nothing more from HMRC as yet.....I'm not going to assume it's all OK though and still expecting to get an unwelcome letter at some point. You never know though.

Sorry, bit of a boring update

[dave_s13]

Buggerit.

Letter through the post this morning from HMRC politely informing us we owe them circa £1.5k.

Haven't seen it yet but there you go!!

I've registered with that SRA intervention scheme anyway, just waiting to hear back from them.

[Jobbo]

Have they requested anything more than the original SDLT - penalties, interest, etc?

[dave_s13]

Jobbo said:

Have they requested anything more than the original SDLT - penalties, interest, etc?

Not sure yet, I haven't read the details until get home later.

[DS3R]

dave_s13 said:

Essentially instead of paying circa £1500 to the HMRC in SDLT we paid a fee of £700 to the firm who then assured me they were implementing a scheme that somehow circumvented payment of SDLT and that after a period of 9 months it could be assumed it was successful.....

To be honest if 3 years later they are telling you you only have to pay the original sum due, I think you've got away lightly!

[RC1]

if my sdlt mitigation scheme fails and the insurance does not pay out then id love only to have to pay back the initial liability.. in reality i expect theyll whack on their punitive interest as well as any fees the legislation allows them the discretion to levy... im on first name terms with my case officer but after 2 years they are still investigating the scheme im part of.... time will tell.

[dave_s13]

I had a chat with a nice chap at hmrc and he was of the opinion that given we acted in good faith then any penalty could well be waived.

It's all up in the air at the moment though, I need to post any and all correspondence I have to hmrc and we can take it to from there.

Don't get me wrong, knowing what I know now I'm not whinging about having to pay the tax, it's just ensuring we aren't penalised due to the actions of a proper bent solicitor that I'm hoping to swerve.

[dave_s13]

anonymous said:

[redacted]

So it looks like I need legal advice. The firm listed above are happy to act on my behalf for £500 and would try to waive any sdlt payment from hmrc..... I'll update later... On my phone

[dave_s13]

So,

In a nutshell

It looks like I have a completion statement that shows I paid Arc the full amount of SDLT.

There is nothing in there to say they implemented the planning scheme...ie I'm £1550 down and have to pay it again.

It effectively it looks like I have paid them the full amount and they have fraudulently filled in the SDLT to show £0 is owed....then pocketed the £1550.

Anyway, I've drafted up a detailed letter to the HMRC disputing the claim that I owe them anything and have all the emails/invoices printed out to support this. The annoying thing is that just after speaking to HMRC (who are very pleasant to deal with btw) I went and made a payment toward the amount owed (allegedly) on advice from the repayment dept chap who suggested that although they like the full amount paid that you can just put in an amount as and when to pay down the debt; looks good if the repayment enforcers (or whatever they're called) start looking at the case. Anyway, I've asked for this back while they make a final decision.

My wife does get some level of legal services with her union so before I get all gung ho and fire off my letter we're going to see if they can offer any advice on how to proceed.

Kick in the balls anyway, My Mrs just finished maternity leave so we are totally skint (overdrawn in fact)....could do without this st!

[Db36]

Hi

I hope you don't mind me replying as I received a letter from hmrc today. I have gone through all my correspondence from the purchase 4 years ago and I clearly asked them to explain more about the stamp duty as I didn't understand. However due to the pressure of everyone wanting to complete I carried on with it all.

What do I need to do as I can either pay it or dispute it as like dave I would have paid 900 to abode on top of the stamp duty of 1.5k if I pay it to hmrc. Double whammy.

What evidence have you put together dave? I have info via email about what the SDLT was about but I had signed the SDLT in which they had already filled in along with all the completion statements (which included 1.5k stamp duty), contracts etc. Do I need to contact stevensons solictors to see if I can get the £900 back? Is that right that they will charge £500 to take on the case and realistically can they really get hmrc to waive the stamp duty as I don't want to lose another £500.

Vin

[dave_s13]

Db36 said:

Hi

I hope you don't mind me replying as I received a letter from hmrc today. I have gone through all my correspondence from the purchase 4 years ago and I clearly asked them to explain more about the stamp duty as I didn't understand. However due to the pressure of everyone wanting to complete I carried on with it all.

What do I need to do as I can either pay it or dispute it as like dave I would have paid 900 to abode on top of the stamp duty of 1.5k if I pay it to hmrc. Double whammy.

What evidence have you put together dave? I have info via email about what the SDLT was about but I had signed the SDLT in which they had already filled in along with all the completion statements (which included 1.5k stamp duty), contracts etc. Do I need to contact stevensons solictors to see if I can get the £900 back? Is that right that they will charge £500 to take on the case and realistically can they really get hmrc to waive the stamp duty as I don't want to lose another £500.

Vin

Sorry to hear you are also having trouble.

The only thing I know for sure is that we will have to pay the SDLT to the HMRC. Whether we then get stung with penalties, interest is not yet known. Also there is a question around whether or not we can claim any of our losses back.

Have a read through my other thread..

http://www.pistonheads.com/xforums/topic.asp?h=0&a...

Edited by dave_s13 on Wednesday 7th May 18:39