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Property buyers appealing a £20,000 tax avoidance scheme to avoid stamp duty have had their case thrown out by a tribunal judge.
The appeal to the First Tier Tribunal was related to a complicated Land Duty Stamp Tax avoidance package.
In April 2023, HM Revenue and Customs declared the scheme unworkable. The promoter then urged around 750 customers who had bought into the scheme to settle with HMRC.
However, in some cases, property buyers ignored the advice and appealed the ruling.
The first appeal before the tribunal was from property buyers William Robinson and Maria McAllister.
The tribunal rejected their appeal application, saying the case had no reasonable prospect of success.
Robinson and McAllister bought £600,000 in property in 2016, transferring 82 per cent of Robinson's 99 per cent equitable interest to McAllister. In return, she agreed to pay Robinson an annuity for life of a fixed £1,242.20 a year.
The couple purported this was a pre-completion transaction that would attract stamp duty relief.
The tribunal ruled that the relief was designed to help a purchaser with a fleeting or transient interest in the land from stamp duty. That duty should be borne by a 'subpurchaser' with an ongoing and substantial interest in the property.
However, no one other than Robinson and McAllister was involved in the contract at any stage.
The tribunal ruled that this meant the conditions for claiming pre-completion transaction relief were not met, and stamp duty of £19,997 was due on the purchase of the property.
Robinson and McAllister were told that if the sale of Robinson's equitable interest had been deemed a pre-completion transaction, tax avoidance rules would have been triggered because obtaining a tax advantage was one of the primary purposes of the arrangement.
The claim for relief would also have been disregarded, and a notional transaction substituted with a chargeable consideration based on the £599,950 paid by the appellants under the original contract and the 12 annual annuity payments payable for the sale of the equitable interest.
Tribunal judge Nigel Popplewell said: "We have no hesitation in concluding, and find as a fact, that the scheme had, as its main or one of its main purposes, the obtaining of a tax advantage for the appellants."
"This analysis is, and has always been, wholly wrong. We, therefore, have no hesitation in striking out this appeal as it has no reasonable prospects of success."
The judgment may impact at least three other appeal cases awaiting First Tier Tribunal hearings.