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HMRC halts £135m stamp duty avoidance scheme

A TAX TRIBUNAL has ruled against a £135m stamp duty avoidance scheme, which included the Chelsea Barracks property deal, Accountancy Age‘s sister publication IFAOnline reports.

HM Revenue & Customs (HMRC) said the set-up, called Project Blue, now faces a bigger tax bill than it would have faced, had it not entered into the arrangement.

The stamp duty sub-sale and alternative finance scheme had been notified by Clifford Chance under the Disclosure of Tax Avoidance Schemes (DOTAS) regulations, and attempted to eliminate all of the stamp duty due on the purchase of Chelsea Barracks in London.

The first-tier tribunal agreed with HMRC that £50m was owed in stamp duty and that without the scheme the purchasers would have only paid £38m. The judgement affects 24 similar commercial cases and about 900 mass market residential cases, protecting £85m.

Project Blue argued that the transactions had been carried out for commercial reasons and not to avoid tax.

However, the tribunal ruled that the company had failed “to put forward evidence of all the factors that may have been taken into account” and failed to establish that tax avoidance was not a factor in their decision to proceed.

HMRC said this important case is the first to test a targeted anti-avoidance rule in the stamp duty egislation.

Exchequer secretary to the Treasury David Gauke said: “This is another important success for HMRC at a tax tribunal. The message is clear that entering into a tax avoidance scheme can cost more than paying the original tax bill.

“Avoidance is complex, expensive and self-defeating. We are cracking down on tax avoidance and evasion, with a £4.6bn package.”

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