JV Ordered To Pay £50m Over Deal Completed In 2007
By Rob Dixon
A ruling that a joint venture must pay £50 million in stamp duty tax in relation to the purchase of Chelsea Barracks after being found to have used an unlawful scheme to complete is a clear sign of continuing efforts to tackle the issue of tax evasion.
Project Blue (Guernsey), established by Qatari Diar and CPC Group, was found to have avoided paying the tax following its transaction to the buy the site in 2007.
HM Revenue and Customs (HMRC) challenged the venture’s use of both alternative finance relief and sub-sale relief based on anti-avoidance rules included in the Finance Act 2003. CPC Group no longer has an interest in Chelsea Barracks.
According to Irwin Mitchell’s team of real estate experts, the decision in the case was another example of the continuing efforts of authorities to address concerns over the use of tax evasion schemes and to enforce the regulations in the area.
Commenting on the case, Alex Barnes, a Partner and specialist in real estate tax issues at Irwin Mitchell, said: “This case is just the latest in a long line brought by the HMRC in its efforts to tackle concerns over allegedly aggressive instances of tax evasion.
“The interesting point in this case was that the SDLT levied was not on the amount the MoD actually received – £959m – but on a higher amount – £1.25bn – paid as part of the scheme transactions.
“It is an outcome which the HMRC will no doubt be rubbing their hands with glee in relation to, while the case overall is a further ominous warning for taxpayers that have or are seeking to avoid paying SDLT with aggressive schemes that HMRC is not afraid to challenge.”
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