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