Olu Olufote v The Commissioners for HMRC
[2023] UKFTT 130 (TC)
Michael Brown & Anor v The Commissioners for HMRC
8 February 2024
[2024] EWCA Civ 92
Court of Appeal
Mr and Mrs Brown tried a clever plan to avoid paying tax on their new house. They used a company to buy it first, then the company gave it to them. The court said this was just a trick and they still owed the tax because they ultimately provided the money. The court found that the tax law should be understood based on the main point of the transaction and not just the legal details.
Key Facts
- •Mr and Mrs Brown used a scheme to acquire a house in Surrey aiming to avoid SDLT.
- •The scheme involved an unlimited company acting as an intermediary.
- •HMRC issued a determination for SDLT, claiming a chargeable transaction occurred.
- •Mr and Mrs Brown appealed, arguing procedural and substantive reasons why HMRC's claim was invalid.
Legal Principles
Purposive interpretation of tax legislation; considering the scheme as a whole to determine tax liability.
Rossendale BC v Hurstwood Properties (A) Ltd [2021] UKSC 16
SDLT is a tax on transactions, not instruments; chargeable consideration can be given directly or indirectly.
Finance Act 2003
Section 45 of the Finance Act 2003 (sub-sale relief) creates a notional secondary contract for SDLT purposes.
Finance Act 2003, Section 45
Section 75A of the Finance Act 2003 (anti-avoidance) creates a notional land transaction if a scheme reduces overall SDLT payable.
Finance Act 2003, Section 75A
A 'connected person' provision applies if consideration is given by a person connected to the transferee.
Finance Act 2003, Section 839 (implicitly)
HMRC can raise a new point of law (connected persons) in a respondent's notice if it supports the existing determination.
Braceurself Ltd v NHS England [2023] EWCA Civ 837
Schedule 10, paragraph 25 allows HMRC to determine SDLT if no land transaction return is filed within the timeframe.
Finance Act 2003, Schedule 10, paragraph 25
Outcomes
Appeal dismissed.
The scheme, viewed as a whole, resulted in a chargeable transaction under SDLT, regardless of the intermediary company. The consideration for the acquisition of the property was indirectly provided by Mr and Mrs Brown. Even if the initial legal arguments failed, the 'connected person' provision meant SDLT was still due.