‘Bo­gus stamp duty dodge cost us £54,000’

The Daily Telegraph - Your Money - - FRONT PAGE -

Sharp rises in stamp duty drove thou­sands to use du­bi­ous ‘avoid­ance schemes’. Now they’re in se­ri­ous trou­ble. By Sam Mead­ows

Prop­erty buy­ers who sought to side­step stamp duty – in some cases by us­ing ap­par­ently le­git­i­mate schemes – now face hav­ing to pay the orig­i­nal duty and in cer­tain in­stances fines and costs on top. The mar­ket­ing of so-called “avoid­ance schemes” surged in the wake of suc­ces­sive stamp duty in­creases, par­tic­u­larly af­ter the 3 per­cent­age point sur­charge that has ap­plied to sec­ond prop­erty pur­chases from April 2016.

Many schemes sought to es­tab­lish their le­git­i­macy by quot­ing opin­ions of lawyers – but in many cases the pro­cesses had not been tested in court. Other schemes were plainly fraud­u­lent and des­tined to fail.

But the back­drop of stamp duty bills run­ning into tens of thou­sands of pounds, and wide­spread con­fu­sion around the sur­charge rules, meant these schemes were tempt­ing to many.

Tele­graph Money first warned in July 2016 of the du­bi­ous le­gal ba­sis re­gard­ing these ma­noeu­vres, some of which promised to cut the duty by up to 100pc – for a fee.

Now a num­ber of cases are com­ing through where HM Rev­enue & Cus­toms has caught up with prop­erty buy­ers and is de­mand­ing pay­ment – and in some in­stances is adding 100pc to the bill as a penalty. One Tele­graph Money reader, a hos­pi­tal doc­tor, bought a house in Cam­bridgeshire in 2014. Self­pro­fess­edly “ig­no­rant” about how stamp duty worked, in the course of re­search­ing the trans­ac­tion she came across a com­pany named CDP Corporate, which was pro­mot­ing a tan­ta­lis­ing avoid­ance scheme.

The stamp duty bill on the prop­erty, cost­ing around £1m, should have been £37,000. The use of the scheme would cut this to just £5,000 and save £32,000, she was promised. The deal went through us­ing a con­veyancer rec­om­mended by CDP Corporate. She paid £16,000 in fees for us­ing the scheme. In all, once the pur­chase went through, the buyer be­lieved she had saved £16,000.

Yet six months af­ter the trans­ac­tion she re­ceived a let­ter from HMRC say­ing it was in­ves­ti­gat­ing the le­gal­ity of the scheme. She heard noth­ing more – un­til last month.

Out of the blue HMRC sent her a bill for £75,000. This was made up of the orig­i­nal duty plus a raft of penal­ties. She and her hus­band at­tempted to con­tact CDP Corporate but found it had been dis­solved. But the hus­band told Tele­graph Money: “My wife is a doc­tor. She doesn’t have the time to think about these things, so it has come as a mas­sive shock. Her mis­take was not tak­ing a sec­ond opin­ion, but she thought she was dealing with trust­wor­thy pro­fes­sion­als, and just did what they asked.”

He added: “For peo­ple with no fi­nan­cial train­ing or ex­pe­ri­ence this is a se­ri­ous trap.”

One of the CDP Corporate staff who spoke to the doc­tor at the time of the trans­ac­tion was Paul Con­nolly, briefly a di­rec­tor of the firm and work­ing in its mar­ket­ing di­vi­sion at the time.

When Tele­graph Money ap­proached him this week he said he be­lieved the scheme had been de­signed by a so­lic­i­tor based on the ad­vice of a QC. But he ad­mit­ted that the “ad­vice” was later dis­cov­ered to be a forgery.

He said the so­lic­i­tor in ques­tion had fab­ri­cated the opin­ion of a prom­i­nent bar­ris­ter, and that CDP Corporate – which he pre­sented as merely mar­ket­ing the scheme for a fee – was forced out of busi­ness as a re­sult. He said that he had no knowl­edge of the forgery while rec­om­mend­ing the scheme to peo­ple.

Mr Con­nolly is cur­rently a di­rec­tor of a sep­a­rate com­pany named CDP Tax & Wealth, trad­ing un­der the name Fidu­cia Wealth & Tax. Its web­site

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