Olu Olufote v The Commissioners for HMRC
[2023] UKFTT 130 (TC)
Michael Murphy & Anor v The Commissioners for HMRC
17 October 2024
[2024] UKFTT 947 (TC)
First-tier Tribunal
A couple tried a tax-saving scheme to pay less stamp duty on their house. The tax office found out and assessed them for more tax. The court ruled the scheme didn't work and the couple had to pay more tax.
Key Facts
- •Appeal against an HMRC assessment charging additional Stamp Duty Land Tax (SDLT) of £8,310.
- •The arrangement was a "husband and wife" SDLT savings scheme.
- •Property acquired for £277,000; SDLT return reported £119,110.
- •HMRC assessment based on Land Registry information (£277,000).
- •Scheme involved a subsale from husband to wife.
- •Solicitor's firm (Arc/Adobe) under SRA intervention.
Legal Principles
Discovery assessment validity requires both a subjective and objective element.
Anderson v HMRC [2018] UKUT 159 (TCC)
Subjective test: Officer must believe information points towards tax insufficiency (more than mere suspicion).
Anderson v HMRC [2018] UKUT 159 (TCC)
Objective test: Officer's belief must be one a reasonable officer could form.
Anderson v HMRC [2018] UKUT 159 (TCC)
Section 45 FA 2003: Subsale relief; transferee not regarded as entering a land transaction.
Finance Act 2003, Section 45
Section 75A FA 2003: Anti-avoidance; notional land transaction if SDLT saving achieved through scheme transactions.
Finance Act 2003, Section 75A
Schedule 10 FA 2003, para 28: Discovery assessment where tax loss discovered.
Finance Act 2003, Schedule 10, para 28
Project Blue v HMRC [2018] UKSC 30: Identifying tax loss location in scheme transactions.
Project Blue v HMRC [2018] UKSC 30
The Pollen Estate Trustee Company Limited v HMRC [2013] EWCA Civ 753: Chargeable interest for tenants in common.
The Pollen Estate Trustee Company Limited v HMRC [2013] EWCA Civ 753
Brown & Anor [2021] UKFTT 208 (TC): Section 45(3) does not disregard contracts as transactions for Section 75A purposes.
Brown & Anor [2021] UKFTT 208 (TC)
Project Blue Ltd v HMRC [2013] UKFTT 378 (TC): Transactions intended to operate together are scheme transactions.
Project Blue Ltd v HMRC [2013] UKFTT 378 (TC)
Outcomes
Appeal dismissed.
Discovery assessment valid; neither Section 45 nor Section 75A FA 2003 reduced the chargeable consideration. The scheme did not achieve a tax saving.
Chargeable consideration found to be £336,555.
Analysis under Section 45 and Section 75A both led to this figure, negating any claimed tax reduction from the subsale arrangement.