The GAAR Advisory Panel has found that arrangements to minimise the SDLT payable on the purchase of a residential property were not reasonable. The scheme involved the purchase of a house by a married couple. Rather than paying SDLT on the full £549,000 purchase price, the arrangements sought to take advantage of special rules for sub-sales and land transactions where the consideration takes the form of an annuity – which the taxpayers contended displaced the ordinary SDLT rules.
The aim was for the property to be ‘sub-sold’ by Mr A to Mrs A by declaration of trust, with consideration from the sub-sale (which took the form of 12 relatively small monthly annuity payments) used for the purpose of SDLT. The desired effect was that the consideration would be within the SDLT nil-rate band, meaning the transaction would be free of SDLT.
The panel found that the arrangements to add a series of steps to what otherwise would have been a straightforward residential conveyancing transaction were ‘contrived and abnormal’, and the entering into those arrangements was not a reasonable course of action.
The GAAR Advisory Panel has found that arrangements to minimise the SDLT payable on the purchase of a residential property were not reasonable. The scheme involved the purchase of a house by a married couple. Rather than paying SDLT on the full £549,000 purchase price, the arrangements sought to take advantage of special rules for sub-sales and land transactions where the consideration takes the form of an annuity – which the taxpayers contended displaced the ordinary SDLT rules.
The aim was for the property to be ‘sub-sold’ by Mr A to Mrs A by declaration of trust, with consideration from the sub-sale (which took the form of 12 relatively small monthly annuity payments) used for the purpose of SDLT. The desired effect was that the consideration would be within the SDLT nil-rate band, meaning the transaction would be free of SDLT.
The panel found that the arrangements to add a series of steps to what otherwise would have been a straightforward residential conveyancing transaction were ‘contrived and abnormal’, and the entering into those arrangements was not a reasonable course of action.
