Fiducia disagreed the ad was implying that the payment of SDLT was optional, but was suggesting that a saving might be available. They considered that the ads were an invitation for prospective clients to discuss their services. They added that only a small number of potential customers went on to retain their services, as their services were not always appropriate.
The advice firm did not accept that there was a legal, statutory or binding definition of tax avoidance. They argued the definition of tax avoidance was an evolving area that depended on tax legislation and that transactions did not generally fall into clear categories.
Fiducia stated they had provided planning that fell under the DOTAS regime, were familiar with the arrangements registered under its requirements, and knew of several hundred registered schemes, but understood that HMRC had not challenged the vast majority of them since 2003.
They declined to reveal to the ASA the detailed steps involved in the tax planning structure.
Fiducia stated that they had extensively discussed their SDLT funding structure with HMRC, who had not, prior to the complaint made to the ASA, directly raised any technical questions relating to the efficacy of the planning.
The planning relied on the use of specifically set out statutory exemption within the SDLT legislation (specifically the Finance Act 2003), which the advisers claimed, had been run past HMRC without raising any eyebrows.
However, the firm acknowledged that HMRC might take the view that their use of the statutory exemption was artificial, but considered that until such a time as it was established by way of tax tribunal, their view did not constitute a legal, statutory or binding definition, and remained their view only.
In relations to DOTAS Fiducia said they were compliant and fully reported to HMRC. They considered that the default position relating to tax planning in the context of DOTAS was that any such planning would start from a position of being outside of the DOTAS regime and it was only if certain conditions were satisfied that the planning was reportable.
Tax lawyers for Fiducia told the ASA: “… in my view the SDLT treatment proposed here ought not to be vulnerable to a challenge under GAAR or otherwise. The emphasis, as far as addressing GAAR and satisfying the general provisions are concerned, must remain on the interest constituting a ‘security interest’. The arrangement between A and B must not be somehow capable of being viewed as a sham and if A occupies the property under the terms of a lease, then it must be shown that he does comply with the various covenants in it. For the reasons given by me above, no liability to report the acquisition of the ‘security interest’ itself ought to arise under either the general reporting requirements or under DOTAS”.
In relation to the SRA “endorsement” Fiducia said there was no implied endorsement and had not misled by omission.
Does not work
The ASA, however, agreed with the complainants and upheld HMRC’s view such schemes “did not work” and the ad was misleading on every point raised.
The ASA ruled on 21 March: “The ads must not appear again in the form complained of. We told Fiducia to ensure they held sufficient evidence for their claims and to disclose any relevant information in their advertising, such as the implications or risks of entering into a financial arrangement, including a challenge to a user’s tax arrangements by HMRC and the charges which might apply. We also told Fiducia not to imply they had been endorsed by the SRA.”
