Advisers and the tax authority are at odds over stamp duty land tax (SDLT) refund claims, with HM Revenue and Customs warning that clients could be hit with a penalty if these are incorrect.
Tax advisers have found that clients who acquired trade properties, via their self-invested personal pension or small self administered scheme, from joint owners or owner-managed companies may have paid SDLT in error.
Tax adviser firm, Cornerstone Tax, said it has already won several test case refunds and now financial advisers are looking into whether this issue also affects their clients pensions.
Leigh Philpot, head of wealth at adviser firm Kingswood Group said: “We were surprised when recently advised by Cornerstone that the payment of stamp duty by pensions in these circumstances was not taxable.
“We believe many of our clients will have been impacted by earlier erroneous tax advice.
“Our advisers are therefore reviewing the circumstances for these clients and working with Cornerstone to seek redress.”
But HMRC clarified that a transfer of property to a pension fund is within the scope of SDLT and warned that a blanket approach to claims referencing this loophole will not be taken and instead each claim will be considered on its own merit.
An HMRC spokesperson said: “In each case the amount of SDLT payable will depend on the specific facts and circumstances surrounding the transfer to the pension fund and pre-transaction clearance provided by HMRC in one case cannot be applied more generally to other cases.”
It also warned that if claims were made in error then the clients would end up having to foot the bill.
HMRC added: “Caution should be taken with approaches or advertisements claiming they can secure a SDLT refund as HMRC retains the right to check claims and any incorrect or unsubstantiated claims can leave claimants liable to a penalty.”
Although Paul Bolt, business development manager at adviser Kingswood Group, said HMRC’s point on making blanket assumptions was valid, he believes each of Kingswood’s cases have been considered carefully.
Mr Bolt said that the firm is taking each case forward on an individual basis and has looked into the specific details of each case.
FTAdviser understands that Cornerstone is helping Kingswood with their claims and said that it if HMRC challenges a case post review it will challenge through the courts, if needs be, at their cost.
If HMRC were to win a reclaim then Cornerstone also said it has the professional indemnity to cover client losses.
Mr Bolt said: “This was the final key element to us in moving forward, as protecting and adding value to our clients is the foundation to our business.
“Due to this fact of clients not being exposed, we do believe advisers should be reviewing their existing client base.
“As Cornerstone offers a no win no fee basis we can’t see why one wouldn’t at least investigate a range of clients who may have been negatively affected thus far. This is exactly what we have done at Kingswood.”