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Victory In Landmark DV3 Case Illustrates HMRC's Aggressive Stance On SDLT Avoidance

Recent Decision Represents ‘Clean Sweep’ For HMRC In Recent SDLT Decisions


By David Shirt

The recent victory for HMRC in the long-running Stamp Duty Land Tax (SDLT) case with DV3 illustrates yet again shows the extent to which the UK tax authorities will aggressively attack avoidance schemes -  says a leading real estate tax lawyer.

The landmark case concerns the Dickins & Jones building on Regent Street in London in which an SDLT scheme was put in place by British Virgin Islands-incorporated limited partnership, called DV3 RS Limited Partnership, to acquire the property with a view to saving the purchaser around £2.6m in SDLT.

The scheme involved a combination of the SDLT sub-sale rules and the partnership rules to mitigate the tax payable.

HMRC initially lost the case in the First Tier Tribunal (FTT) and on appeal the Upper Tribunal (UT) confirmed the decision of the FTT. The Court of Appeal has however allowed HMRCs appeal from the UT and consequently the £2.6m SDLT is now payable. 

Alex Barnes, real estate tax partner at Irwin Mitchell, said: “In light of the decision in this case HMRC has a clean sweep of victories in the recent SDLT avoidance cases it has brought to Court namely Vardy, Allchin and the Project Blue (Chelsea Barracks) case.

“With deep pockets and a mandate to aggressively attack SDLT avoidance schemes, those organisations which have previously implemented them, or are in the process of doing so, should be ready for HMRC to challenge these and to continue to do so should any Court decision not go their way.”