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£10bn in UK stamp duty ‘may have been overpaid’

PEOPLE with their own pensions who purchased commercial property as part of the pot may have paid stamp duty or land and buildings tax unnecessarily, it is claimed.

David McGhie, a director at accountants and advisors Acumen, says the intricacies of the Finance Act 2003 have led to a general belief that land and buildings tax and stamp duty is payable on the purchase of all commercial property.

However, it is claimed there is no requirement to tax property transferred from a pension partnership to a connected pension trust scheme.

In one example, the taxman found in favour of a client who held a property jointly with his wife and who rented the property to their family-controlled company.

The rented property was transferred to a connected pension scheme at market value of £580,000.

Mr McGhie said all parties were connected to each other for the purposes of the stamp duty land tax/land and building transaction tax provisions relating to partnerships, and since the property was being transferred from a partnership to a connected pension trust scheme, there was no chargeable consideration.

The £18,500 tax paid was ruled to have been in error and the client received a refund of the tax in full plus interest. Mr McGhie says he believes the case is the tip of the iceberg and it comes as a push is launched to recover money for clients on a no-win no-fee basis.

A number of legal organisations are involved in the campaign which it is claimed could represent more than £10 billion of recoupable payments across the UK.

Owners of dental and medical practices and footballers are examples of the type of people who use such pensions. It involves SIPPs, self-invested personal pensions, which allow individuals to make their own investment decisions, and SSASs, which are small occupational pension schemes, designed for up to 12 members, usually for the owners or directors of small businesses.

Mr McGhie said: “There is a general belief that land and buildings tax and stamp duty, the equivalent in England and Northern Ireland, is payable on the purchase of a commercial property.

“Over the past 13 years many properties have been sold by people to their own pension schemes as an investment in situations where tax is simply not due.

“Tax has therefore been overpaid on thousands of these transactions.”

He said on this basis tax may have overpaid on “thousands of transactions” and this is due to the complexities of the tax.

“Where property passes from multiple owners, into their SIPP or SSAS, regardless of whether it was cash bought or ‘in specie’ the tax is not due as the special provisions in Act apply.

“Refunds of tax have been obtained in these circumstances on behalf of SIPPs and SSASs.”

Mr McGhie said: “Acumen has retained accountants and tax specialists in this field to act as tax expert and claims manager to recover any tax due and manage any claims. This service is provided on a no-win no-fee basis.”

While finding in favour of husband and wife claimants in a separate case, Her Majesty’s Revenue and Customs wrote: “There is no precedent value for the advice set out in this letter that could be applied for other customers or for any other transaction, even if similar in nature.”

An HMRC spokesman said: “Where a purchaser believes that Stamp Duty Land Tax has been overpaid, they may claim a refund using the Overpayments Relief provisions in SDLT legislation, within four years of the relevant transaction.

“Each claim will be reviewed and considered on its own facts as statutory exclusions may prevent a claim in some cases. You should beware of advertisements that claim they can secure a tax refund for you, as incorrect or unsubstantiated claims can leave you liable to a penalty.

“SDLT was replaced by Land Transaction Tax in Scotland from April 2015, and by Land and Buildings Transaction Tax in Wales from April 2018.”

A Scottish Government spokesman said: “We cannot comment on the UK Government’s Stamp Duty Land Tax and Finance Act or the detail of individual tax cases, consider appeals, or review tax decisions made by Revenue Scotland.”

Originally published in The Herald