News & publications

The SDLT anti-avoidance rule was initially brought into force by statutory instrument in December 2006 and was subsequently re-worked and enacted in Finance Act 2007as sections 75A-C of Finance Act 2003.

The new sections 75A-C brought into force a general anti-avoidance rule which is very widely drafted, has no motive test and has been the subject of many complaints from practitioners about its impenetrable drafting: there are many situations where a perfectly sensible commercial transaction is carried out (with no avoidance motive whatever) but, on the face of the legislation, section 75A could apply to substitute a different (higher) SDLT charge.

HMRC's guidance on their interpretation of section 75A is, fundamentally, not very helpful, however it does, at least, recognise that "HMRC… takes the view that [s.75A] applies only where there is avoidance of tax. On that basis, HMRC will not seek to apply s.75A where it considers transactions have already been taxed appropriately."

There is no discussion of what HMRC regard as a transaction that has been taxed "appropriately".  HMRC lists in the guidance scenarios where it considers s.75A applies and "is unlikely to" apply, however it gives little (if any) reasoning for the view expressed.  In both cases, the "guidance" gives little comfort to the prudent taxpayer that HMRC would not seek to apply an "anti-avoidance" rule to their transaction.

There is no formal system of rulings for s.75A and so transactions must be reported on a purely self-assessed basis.  While guidance from HMRC is, in general,  to be welcomed, until HMRC issues some real guidance (that actually guides one through the legislation) taxpayers will remain in the dark as to its true application.

In any event, the extent to which a taxpayer can rely on HMRC guidance (however clear and unambiguous) remains in doubt following the recent Hanover Company Services case at the tax tribunal.

Follow all our latest tax updates on Twitter