Tax avoidance schemes can be tempting, but in one case property buyers whose hopes of escaping Stamp Duty Land Tax (SDLT) were wrecked by retrospective legislation failed to convince the Court of Appeal that their human rights were violated.
The perceived loophole in the SDLT regime on which the relevant scheme relied was closed by the Finance Act 2013 (http://www NULL.legislation NULL.gov NULL.uk/ukpga/2013/29/contents). A number of taxpayers affected by the change in the law launched judicial review proceedings, arguing that their rights to a fair hearing and to peaceful enjoyment of their private property had been breached.
It was also submitted that the maximum loss to HM Revenue and Customs as a result of the scheme was only about £7 million. On that basis, there was no significant risk to the public finances and there were no wholly exceptional circumstances which could justify the extreme step of legislating retrospectively.
The taxpayers’ arguments were, however, rejected by a judge. In dismissing their challenge to that decision, the Court found that their human rights were not engaged. The assertion of a right to tax relief did not amount to a ‘possession’ which should be afforded protection and the right to a fair hearing did not apply to tax disputes in that they did not involve determination of civil rights and obligations. The legislative changes were also neither unforeseeable nor arbitrary.