HM Revenue & Customs’ Proposals to SDLT Clients

Introduction

Please note that the below offer has now expired however creditors may wish to contact HM Revenue & Customs to discuss this matter. This webpage is for information purposes only.

We have received confirmation from HM Revenue & Customs (“HMRC”) of their settlement proposals to clients of the Companies. We provide below a summary of our understanding of these proposals.

Please note that the administrators / liquidators are not permitted to negotiate settlements terms on behalf of their clients.  Over involvement with regards to HMRC’s settlement proposals have been to understand them so as to appropriately convey them to clients.  We provide below a summary of our understanding of these proposals and attach documents provided by us by HMRC in this respect.

The joint administrators /liquidators have not provided and cannot provide any advice to clients regarding their own individual tax matters including whether or not to accept one of HMRC's settlement proposals.  Clients should consider taking their own independent professional advice regarding their tax matters.

Background to HMRC’s Proposals

HMRC have informed us that they consider that all types of SDLT sub-sale schemes sold by the Companies have or will be challenged by HMRC and that the tax requested must be paid. Consequently, the following schemes have or are likely to be challenged by HMRC:

  • Nominee
  • Husband & Wife (including the Dual Completion (variant)
  • Unlimited Company Scheme
  • Commercial
  • Kass
  • PLTD
  • Matterhorn
  • Option
  • 3S
  • Crystal  
  • Jovian

Determination notices have been received by a number of the Companies’ clients and we have been informed by HMRC that further assessments will follow.

Clients have three generic options:

Option 1 - Pay the SDLT:

In doing so they would be accepting that the SDLT is due and payable. Interest at 3% will be payable from the date the SDLT was originally due and will accrue on any outstanding unpaid SDLT until it is paid. Penalties may also be applied.

Option 2 - Make an on-account payment:

In making such a payment to HMRC, a client will effectively be requesting that it be held as a general payment on account of any SDLT being demanded but retaining the right to request repayment of this amount at any time.  In the event that the SDLT is found to be payable, interest will be payable from the date the SDLT was originally due until the date the payment on account is made and will continue to accrue on SDLT not covered by the on-account payment. Penalties could still be payable on the full amount of SDLT.

Option 3 - Appeal HMRC's determination:

Interest will continue to be applied at 3% from the date the SDLT was originally due.  Penalties may also be applied.  If the appeal is successful no tax or interest will be payable. If the appeal is unsuccessful the full SDLT will be payable plus interest which will accrue from the date the SDLT was originally due until the SDLT is paid. You may also be liable for HMRC's costs of opposing the appeal in addition to any costs you may incur in bringing the appeal (such as legal fees) and possibly penalties.

HMRC have stated that they are making an application for an Information Notice under Para 5, Schedule 36 of the Finance Act 2008. The application will be considered by a judge. If the judge grants HMRC's application for the Notice, the administrators will be required to provide the full names, addresses and the full addresses of the properties to which the scheme was applied (if different) of all users of the following schemes:

  • Nominee
  • Husband & Wife (including the Dual Completion (variant)
  • Unlimited Company Scheme
  • Commercial
  • Kass
  • PLTD
  • Matterhorn
  • Option
  • 3S
  • Crystal  
  • Jovian

Proposals for clients who purchased an Unlimited Company Scheme (“UCS”)

HMRC have confirmed that they can provide formal settlement terms for clients who have purchased UCS schemes.  Where clients accept Option 1 (pay the SDLT). The proposal requires clients to accept one of the two options:

Option 1.1. Pay the tax within 90 days of formally accepting that the SDLT is payable. Interest at 3% will still be applied up to the date of you accepting the offer. HMRC will agree not to seek approval for penalties to be applied.

Option 1.2. Pay the SDLT within 12 months of formally accepting it is payable. Interest at 3% will still be applied up to the date of your acceptance and thereafter at 4% over the unpaid balance until it has been paid in full.  Again, penalties will not be sought by HMRC in this situation.

HMRC has said that it will apply a deadline of 30 April 2014 (“the Deadline Date”) for clients to confirm that they intend to accept one of options 1.1 or 1.2. Should a client wish to accept one of these settlement options then HMRC would require the client to complete the “Opportunity to Settle” form (available for download from this website) and return it to them, using one of the options listed at the bottom of the form, before the Deadline Date

HMRC have also provided us with a document titled “Frequently Asked Question: HMRC SDLT Settlement Opportunity” which provides some additional information with regard to the Settlement Proposal.

Other SDLT Schemes

Whilst HMRC have not confirmed any formal proposals regarding the other schemes sold by the Companies (i.e. not the UCS Scheme or those affected by the retrospective legislation) they have informed us that they are under consideration. In the meantime, HMRC have informed us that they are willing to consider the same proposals offered to UCS clients on a case by case basis. In order to be considered for one of the two options a client will need to complete and return to HMRC the “Opportunity to Settle” form. HMRC’s contract details are included on the form.

Clients who purchased schemes which have been affected by retrospective legislation

HMRC have informed us that they are unable to provide settlement proposals to clients who purchased schemes which have deemed to have failed following the changes to S45 of the Finance Act 2013 which were applied retrospectively to schemes sold on or after 21 March 2012.