Brown & anr (appellants) v HM Revenue & Customs (respondents)

Wednesday 31 January 2024

By Appellant’s Notice filed on 19 January 2023, the Appellants appeal the decision of the Upper Tribunal, Tax and Chancery Chamber, dated 15 November 2022

Background (summary) – On 15 August 2007 the Appellants acquired a house (the “Property”) pursuant to an arrangement where the property was first purchased by an unlimited company (the “Company”), funded through the issue of shares in the Company to the Applicants for consideration that equated to the value of the property plus conveyancing costs. The Property was then transferred, on the same day, to the Applicants on a distribution in specie by the Company showing no consideration.

This was a marketed scheme which sought to take advantage of the “sub-sale relief” for SDLT contained in s45 of the Finance Act 2003.

Following the transfer of the Property, the Applicants made no SDLT return on the basis that no chargeable consideration had been given for the transfer of the Property to them.

On 8 August 2011 HMRC issued a notice of determination (the “Determination”) to the Appellants in relation to the acquisition of the Property setting SDLT liability at 4% of £955,000 (£38,200)

The Determination was appealed to the FT Tribunal, Tax Chamber. Their Judgement of 7 June 2021 dismissed the appeal although he found that the actual purchase price was £960,002 having found that the Determination had been made in relation to the actual transfer to the Appellants.

This decision was appealed to the UT. By its decision of 15 November 2022 the UT dismissed the appeal, although it found that the Determination had been made in relation to the notional transfer under s75A of the Act so the correct purchase price was £955,000.

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Part 2