Can you rely on HMRC to give you correct guidance on stamp duty?

Posted 11th July 2023 by ctatax-admin

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for stamp duty advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty.

Introduction

When it comes to understanding tax regulations and fulfilling our financial obligations, guidance from authoritative sources is crucial. In the United Kingdom, Her Majesty’s Revenue and Customs (HMRC) plays a pivotal role in providing guidance to taxpayers. However, the question arises: Can you truly rely on HMRC’s own guidance? In this blog post, we will explore the factors that determine the trustworthiness of HMRC’s guidance and provide insights to help you navigate the complexities of the tax system.

1. Expertise and Authority

HMRC is the UK’s tax authority, responsible for administering various tax laws and regulations. As such, it possesses a significant level of expertise and authority in matters concerning taxation. HMRC’s guidance is sometimes based on comprehensive knowledge of the tax code and legal interpretations but nevertheless remains their view of the law. Consequently, it can serve as a valuable resource for individuals and businesses navigating their tax obligations.

Read: Top stamp duty saving tips for landlords

2. Legal Status

HMRC’s guidance holds legal weight in certain circumstances. Statements published in the HMRC manuals, specifically in the ‘Revenue and Customs Manuals’ (known as RCM), can be used by taxpayers to support their tax positions. This legal status can provide reassurance when relying on HMRC’s guidance. However, it is important to note that not all guidance has the same level of authority, and specific advice may vary based on individual circumstances (see below).

3. Interpretation and Clarity

One of the challenges taxpayers face when relying on HMRC’s guidance is the interpretation of complex tax laws. It should be remembered that HMRC does not create tax law, it applies it’s own interpretation of what was Parliament’s intention when drafting the law. Sometimes this interpretation is coloured by HMRC’s hopes rather than strict legal wording or even Parliamentary intention. The guidance provided by HMRC aims to simplify complex legislation into digestible information, but the nature of tax regulations can still leave room for interpretation. Taxpayers must exercise caution when relying solely on HMRC’s guidance, as individual circumstances and specific cases can lead to different outcomes.

4. Updates and Relevance

Tax legislation is subject to constant change. HMRC regularly updates its guidance to align with new laws and regulations. However, there is often a long delay between changes in legislation and the corresponding revisions in HMRC’s guidance, particularly if HMRC are hoping an appeal in the courts will reverse a previous decision. Taxpayers must stay informed about the latest developments in tax law through official channels and professional advice.

5. Specific Circumstances

While HMRC’s guidance provides general advice, it may not cover every unique situation. Taxpayers with complex financial circumstances, intricate business structures, or those engaged in specific industries might require tailored advice from tax professionals. HMRC’s guidance should be considered as a starting point, with additional expertise sought when necessary to ensure compliance with tax laws.

Read: How multiple dwellings relief can save you thousands on stamp duty

6. Precedents and Case Law

Taxation is a complex and ever-evolving field. In some cases, courts have ruled on disputes involving the interpretation of tax laws. Such precedents and case law can impact how HMRC’s guidance is applied in practice. Taxpayers should be aware that HMRC’s guidance may not always align with judicial interpretations. In such situations, seeking legal counsel or professional advice becomes even more important.

Conclusion

With their expertise and authority, HMRC’s guidance provides valuable insights into tax regulations. However, it is important to recognize that relying solely on HMRC’s guidance may not be sufficient in all cases. Taxpayers should exercise caution, considering the limitations of general guidance and seeking professional advice when dealing with complex situations or changes in legislation.

Although HMRC’s own guidance can be a valuable tool for navigating the intricacies of the UK tax system, even HMRC consider the guidance not to be the arbiter of tax law when matters go to the courts for consideration. Several times in the last few years HMRC have argued in court that their own guidance was wrong, of no merit, or less weight than a textbook, in order to try and win cases. Indeed in one recent case they not only asked the judge to disregard their own guidance but also asked him to ignore the evidence.

To ensure compliance with tax laws, individuals and businesses must remain informed about the latest updates, understand the nuances of their specific circumstances, and be willing to seek additional expertise when needed. HMRCs guidance can be useful but with the caveats referred to in the preceding paragraph.

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for stamp duty advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty.