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Court rejects challenge to anti-avoidance rules on Stamp Duty tax

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  • 07/08/2015
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Court rejects challenge to anti-avoidance rules on Stamp Duty tax
The Court of Appeal has quashed an attempt to have Stamp Duty Land Tax anti-avoidance rules declared unlawful, after legislation was introduced by the Chancellor to shut schemes down in 2012.

The appellants, which had avoided paying Stamp Duty on their properties through a scheme known as the Blackfriars scheme devised by chartered accountants Blackfriars Tax Solutions, challenged the government’s action through a judicial review.

Presenting their case at the Court of Appeal, they claimed that the government’s actions represented an abuse of their rights under the European Convention on Human Rights to a fair trial and to protection of property.

In his 2012 Budget statement, George Osborne said he would clamp down on Stamp Duty tax avoidance, by acting retrospectively if necessary. When property buyers were found to be continuing to use tax avoidance schemes to try to avoid their liabilities, the government brought in legislation to close schemes down.

The appellants’ case was dismissed by the court which said tax proceedings did not relate to the determination of a civil right or obligation.

Lord Justice Vos who presided over the case said: “The Government had made it perfectly clear that SDLT avoidance schemes… would not be tolerated, and that retrospective legislation would be used to achieve that objective. The appellants can have been in no doubt about any of that, before they decided to take advantage of a scheme devised purely to circumvent the precise wording of section 45(1A) as it was before the legislative changes.”

Jim Harra, director general for business tax, said: “HMRC and HM Treasury moved fast and effectively to defend anti-avoidance rules and counter a blatant attempt to avoid paying Stamp Duty Land Tax. This ruling puts all users of such schemes on notice that the legislation works as intended to stop these abusive schemes in their tracks, and we won’t hesitate to enforce the rules.”

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