One minute with John Shallcross, SDLT specialist at Blake Morgan.
What’s keeping you busy at work?
Landlords of residential property portfolios who became involved in the hybrid LLP structure are facing serious tax difficulties. HMRC’s updated Spotlight 63 now mentions the SDLT issues. Many landlords are facing significant complexity and large potential SDLT liabilities. The issues arising are many and varied!
If you could make one change to tax, what would it be?
A pet hate is the pair of deeming provisions in FA 2003 Sch 16 para 3(3) and (4) for leases granted to or by bare trustees. Contrary to the usual principles, the bare trustee is treated for SDLT purposes as the ‘purchaser’ or ‘vendor’ for the lease, rather than the beneficial owner. It seems to me that a wrong turn was taken with these provisions in 2005 in seeking to block avoidance. These deeming provisions can cause complexities for transactions such as lease surrenders and regrants and sale and lease back transactions. It would be better to use the mechanism applied for leases where certain reliefs are claimed (group relief, charities relief and leaseback relief) in FA 2003 Sch 17A para 11. That involves a later assignment of the lease being treated as the grant of a new lease for the rest of the term at the rest of the rent.
We have a Budget coming up; who knows, this might be changed!
SDLT has dominated the national news. What’s your take on the current debate?
After the publicity over Angela Rayner’s SDLT liability, conveyancers have become more alert to SDLT complexities. Some are seeking help from SDLT specialists so they can advise with confidence; more often, they are recommending that clients obtain their own specialist advice. It is an indictment of the complexity of SDLT that, for many non-routine transactions, clients must incur the trouble and expense of seeking advice their conveyancer feels unable to give.
Are there any new rules that are causing a particular problem in practice?
The draft provisions for the registration of tax advisers in the current Finance Bill, in my view, defines as ‘tax advisers’ conveyancers submitting SDLT returns and will require their firms to register. Conveyancers are uncomfortable with the ‘tax adviser’ label.
Has a recent change in HMRC practice impacted your work?
HMRC have at last got to grips with the cottage industry encouraging taxpayers to recover SDLT on the purchase of ‘uninhabitable’ properties. It looks as if HMRC are now moving on to cases where reclaims firms have been encouraging people to reclaim SDLT where a residential property has shared facilities, sometimes a communal garden, but also features such as a shared laundry or gym.
Has a recent case caught your eye?
I found the Court of Appeal decision in National Iranian Oil Company v Crescent Gas Corporation Ltd [2025] EWCA Civ 1211 interesting. It is not a tax case, but there are implications for the tax treatment of unwritten declarations of trust. It might be relevant for some Spotlight 63 cases where the letter of trust was not signed.
The orthodox view has been that a trust of land can be declared without signed writing: it is unenforceable if the LPA 1925 s 53(1)(b) requirements are not met, but still valid. I initially read the majority in Crescent Gas as suggesting that validity only arises (retrospectively) once sufficient evidence exists. The position seems more nuanced: para [265] indicates that, in the absence of evidence, the courts cannot treat a trust as existing, but the trust is not to be regarded as ‘invalid’ or ‘void’ until that time.
I understand the decision is likely to be appealed – it will be interesting to see what the Supreme Court makes of it.
You might not know this about me but...
I am a relative of Florence Nightingale and had a hand in arranging for the design and installation of the ‘Calling Window’ in Romsey Abbey in 2020 to mark the 200th anniversary of her birth.
One minute with John Shallcross, SDLT specialist at Blake Morgan.
What’s keeping you busy at work?
Landlords of residential property portfolios who became involved in the hybrid LLP structure are facing serious tax difficulties. HMRC’s updated Spotlight 63 now mentions the SDLT issues. Many landlords are facing significant complexity and large potential SDLT liabilities. The issues arising are many and varied!
If you could make one change to tax, what would it be?
A pet hate is the pair of deeming provisions in FA 2003 Sch 16 para 3(3) and (4) for leases granted to or by bare trustees. Contrary to the usual principles, the bare trustee is treated for SDLT purposes as the ‘purchaser’ or ‘vendor’ for the lease, rather than the beneficial owner. It seems to me that a wrong turn was taken with these provisions in 2005 in seeking to block avoidance. These deeming provisions can cause complexities for transactions such as lease surrenders and regrants and sale and lease back transactions. It would be better to use the mechanism applied for leases where certain reliefs are claimed (group relief, charities relief and leaseback relief) in FA 2003 Sch 17A para 11. That involves a later assignment of the lease being treated as the grant of a new lease for the rest of the term at the rest of the rent.
We have a Budget coming up; who knows, this might be changed!
SDLT has dominated the national news. What’s your take on the current debate?
After the publicity over Angela Rayner’s SDLT liability, conveyancers have become more alert to SDLT complexities. Some are seeking help from SDLT specialists so they can advise with confidence; more often, they are recommending that clients obtain their own specialist advice. It is an indictment of the complexity of SDLT that, for many non-routine transactions, clients must incur the trouble and expense of seeking advice their conveyancer feels unable to give.
Are there any new rules that are causing a particular problem in practice?
The draft provisions for the registration of tax advisers in the current Finance Bill, in my view, defines as ‘tax advisers’ conveyancers submitting SDLT returns and will require their firms to register. Conveyancers are uncomfortable with the ‘tax adviser’ label.
Has a recent change in HMRC practice impacted your work?
HMRC have at last got to grips with the cottage industry encouraging taxpayers to recover SDLT on the purchase of ‘uninhabitable’ properties. It looks as if HMRC are now moving on to cases where reclaims firms have been encouraging people to reclaim SDLT where a residential property has shared facilities, sometimes a communal garden, but also features such as a shared laundry or gym.
Has a recent case caught your eye?
I found the Court of Appeal decision in National Iranian Oil Company v Crescent Gas Corporation Ltd [2025] EWCA Civ 1211 interesting. It is not a tax case, but there are implications for the tax treatment of unwritten declarations of trust. It might be relevant for some Spotlight 63 cases where the letter of trust was not signed.
The orthodox view has been that a trust of land can be declared without signed writing: it is unenforceable if the LPA 1925 s 53(1)(b) requirements are not met, but still valid. I initially read the majority in Crescent Gas as suggesting that validity only arises (retrospectively) once sufficient evidence exists. The position seems more nuanced: para [265] indicates that, in the absence of evidence, the courts cannot treat a trust as existing, but the trust is not to be regarded as ‘invalid’ or ‘void’ until that time.
I understand the decision is likely to be appealed – it will be interesting to see what the Supreme Court makes of it.
You might not know this about me but...
I am a relative of Florence Nightingale and had a hand in arranging for the design and installation of the ‘Calling Window’ in Romsey Abbey in 2020 to mark the 200th anniversary of her birth.
