Jurisdiction(s):
United Kingdom

Murphy v HMRC: FTT upholds discovery assessment; SDLT sub-sale under FA 2003 s45 fails; s75A applies; chargeable consideration set at £336,555, exceeding contract price

Published on: 04 November 2024

Published by a LexisNexis Tax expert

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Murphy and another v HMRC [2024] UKFTT 947 (TC)

The appellants, Mr and Mrs Murphy, purchased a property for £277,000 using a joint mortgage. On the same day the sale contract was signed, they entered a further agreement under which Mr Murphy committed to transfer to Mrs Murphy all but 1% of his 57% interest in the property, with that transfer taking place under the sale contract. The arrangement aimed to trigger the sub-sale provisions in section 45 of the Finance Act 2003, so that for SDLT the chargeable consideration would be limited to what Mrs Murphy paid under the sale contract for her 43% share, namely £119,100. As this amount was below the SDLT threshold, their SDLT1 return reported no SDLT payable.

The first question before the FTT was whether HMRC’s discovery assessment was valid. HMRC’s interest was prompted because the appellants’ agent was being investigated for promoting SDLT avoidance schemes and had been closed by the Solicitors Regulation Authority. As part of a review of all SDLT returns filed by that agent, HMRC compared the SDLT1 submitted by the agent with the land...

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