Updated: Jul 5, 2020
If you are involved in tax planning as a designer, promoter or beneficiary you may wish take note of the latest HMRC spotlight 43 added in March 2018.
The Advertising Standards Authority (ASA) ruled on misleading claims made about SDLT schemes by their promoter. The promoter’s advertising failed to highlight that the SDLT scheme offered is a form of tax avoidance which HMRC is likely to challenge.
The ASA agreed with HMRC and ruled that the claims made by the promoter were misleading and must be withdrawn.
This is the third time HMRC has used the ASA in this way to tackle schemes that sound too good to be true and give no obvious consideration to the substantial and very real anti-avoidance measures in place to tackle tax avoidance schemes which include: –
Targeted anti-avoidance rules
Disclosure of tax avoidance schemes (DOTAS)
General anti-abuse rules (GAAR)
Serial tax avoidance regime
What this means for promoters
The ASA ruling sets an example so other avoidance promoters can’t make the same claims about similar arrangements.
The promoter and other promoters of similar planning arrangements must now remove these claims from their advertising or risk facing ASA sanctions for failing to comply with its rulings.
What to do if you’re using an SDLT scheme
If you’re using one of these schemes, you’ll be challenged by HMRC and will be charged interest on top of the SDLT due. You’re also likely to be charged a penalty for an inaccurate return. Depending on your approach you may also find all your tax affairs more fully investigated both now and in the future.
It pays to be cautious and seek independent expert advice
Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. Both the court of public opinion and tax rules have changed massively in recent years and what might have worked or been acceptable previously may not be now.
Be aware that HMRC can challenge SDLT (and similar) schemes up to four years after the effective date of the transaction and this can be extended if there has been a careless or deliberate error in the submission of the SDLT return.
The message is clear, be cautious, investigate the risks and always seek independent expert advice. If it sounds too good to be true it probably is.
If you have any questions or concerns, please do not hesitate to contact us.