Fiducia advertised a stamp duty land tax (SDLT) scheme which claims to use government approved statutory rules that are within the tax legislation to reduce SDLT bills on residential property purchases by 60%.

In practice, no SDLT is paid on the purchase and Fiducia keeps the balance of 40% as its fee.

HMRC’ says its understanding of the scheme is that it is based around an SDLT exemption normally available when mortgage providers take a ‘security interest’ in a property as security for a mortgage. Fiducia is selling a scheme which seeks to misuse this exemption through a complex series of transactions, so that no SDLT is paid.

HMRC says these types of arrangements fall under the meaning of ‘avoidance’ and claims that such schemes are not disclosable under the disclosure of tax avoidance schemes (DOTAS) rules are only correct if they do not fall within one of the DOTAS hallmarks.

The ASA has also ruled that the Fiducia website ‘misleads by omission’ by failing to mention the many government tools and policies aimed at counteracting the avoidance they ae promoting, including the general anti-abuse rule (GAAR).

The Fiducia website also fails to highlight that the SDLT scheme offered is a form of tax avoidance which HMRC is likely to challenge.

HMRC says the ASA ruling sets an example so other avoidance promoters cannot make the same claims about similar arrangements.

Fiducia 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.

It warns that anyone using one of these schemes will be challenged and will be charged interest on top of the SDLT due.  They are also likely to be charged a penalty for an inaccurate return.

For transactions after 16 November 2017, they may generally be charged a penalty because of carelessness, unless they can show they took reasonable care.

Stamp Duty Land Tax avoidance: misleading advertising (Spotlight 43) is here.

Report by Pat Sweet