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High Court overturns SDT in stamp duty land tax case

High Court overturns SDT in stamp duty land tax case

In a recent High Court decision concerning Stamp Duty Land Tax [SDLT], the decision of the Solicitors Diciplinary Tribunal [SDT] received substantial criticism and the sanction which was a fine of £15.000 overturned. The Court considered replacing the sanction with a strike off, but decided in the event to remit the case back to the Tribunal for further argument.

The case of SRA v Chan, Ali abd Abode. 28 September 2015 , Lord Justice Davis and Mr Justice Ouseley heard an appeal from the SDT in a case that involved a company providing legal services which was controlled by the first two respondents, operated, in the context of conveyancing transactions, certain schemes designed to avoid or mitigate the impact of stamp duty land tax (“SDLT”).

It was in effect said, in a nutshell, that they introduced numerous clients to such schemes, which were of considerable potential risk and disadvantage to the clients but of considerable potential profit to Abode (primarily in the form of commissions and referral fees from the scheme providers) without informing clients of the aggressive and risky nature of the schemes or of their own personal opportunity to gain commissions: thereby subordinating the interests of their clients to their own personal profit.

The respondents routinely offered the availability of such SDLT schemes to significant numbers of their clients. By no means all elected to participate: but, as the Tribunal found, Abode completed 556 conveyancing transactions involving such schemes. The respondents received £994,693 in total by way of referral fees and commissions in consequence, in addition to the conveyancing fees charged. The activities occurred between 2009 and 2012, by which time investigations by the SRA had been started.  

There were four SDLT schemes which were operated. One was known as the “Husband and Wife” scheme. One was known as the “Unlimited Company” scheme. One was known as the “Nominee” scheme. One was known as the “Option” scheme. The schemes were variously promoted by one or more providers, being Professional Advice Bureau; Innovative Tax Solutions Limited/Inventive Tax Solutions Limited/Inventive Tax Strategies Limited (“ITS”); Universal Planning Services Limited (“UPS”); and Omega Planning Limited (“Omega”).

The last named was a company incorporated in the Seychelles. The directors and shareholders were the respondents. It commenced trading in September 2011, involving itself only in the Option scheme. As found, 55 clients completed transactions involving Omega. As found, none were initially informed of the respondents’ connection with Omega: although (after the investigation by the SRA started) those clients engaged in ongoing transactions were then informed by Abode that “some of our directors have a financial interest” in Omega. 

The decision of the Tribunal was 'immensley detailed and ran to 222 paragraphs and 60 pages. The charges levelled against the respondents were described as 'many and varied. Unhappily, they were, as formulated, for the most part unduly and unnecessarily convoluted and prolix'. 

The main conclusion of the Tribunal was that they were not satisfied that the Respondents had acted without Integrity. This decision was made following detailed submissions by Counsel for the SRA, which were accepted in full by the Court. LJ Davis found as follows:

'I think, in particular, that the allegations of want of integrity and acting with lack ofindependence really follow from the primary facts as found by the Tribunal: and, withall respect, its conclusion to the contrary is not sustainable'

As a result, the sanction of a £15,000 fine could not be justifed and the case was remitted back to the SDT, despite submissions from Counsel for the SRA that the only possible sanction would be Strike Off. Counsel Tim Kendal, for the First Respondent persuaded the court to remit the case back to the Tribunal for further representations to be made.

One wonders whether or not the Court had in mind the dicta of Lord Justice Laws in  Fatnani & Raschid v General Medical Council [2007] EWCA Civ 46 who said,

'It is clear that the overriding principles are the preservation of public confidence in the profession and the need to give a special place to the judgment of the specialist panel' 

It seems here that the specialist panel came a poor second to the High Court!

For any advice and assistance for issues like these please do call Jeremy on 0844 2722322 or submit a comment below. Jeremy will come back to you at the earliest convenience.

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