Finance bill 2018/19: Good news for overseas investors in UK Real Estate through offshore property unit trusts

It has been clear for some time that, from April 2019, non-UK residents would become subject to UK tax on gains when disposing of investments in UK commercial property or substantial interests in UK “property rich” vehicles. Whilst draft legislation has been produced and consulted on, a missing piece of the jigsaw has, until now, been details of how non-residents who invest through “collective investment vehicles” such as offshore property units trusts and other collective investment schemes (CIVs) would be taxed. Continue reading

HMRC wins landmark SDLT avoidance case

In a 4-1 ruling, the Supreme Court has found in favour of HMRC in the long-running saga of Project Blue Limited v. HMRC (2018) UKSC 30, to the effect that the taxpayer was liable to pay stamp duty land tax (SDLT) on the amount of financing (£1.25bn) it received under the sharia’h law compliant structure, and not merely on the actual price it paid for the land (£959m).

To recap briefly, the taxpayer had contracted to buy a freehold property at Chelsea Barracks in London from the Secretary of State for Defence for a basic price of £959m and had arranged to finance this, along with anticipated development costs, by using a sharia’h law structure under which it sub-sold the freehold on to a banking group for £1.25bn and immediately leased back the asset on terms that effectively replicated a normal financing arrangement, at the same time taking a right to buy back the freehold in the future once the financing arrangement had run its course.

Continue reading

New Trusts Registration Service and the UK Real Estate Sector

For any real estate developers with trusts in their holding structures, there are new regulations in force that make it a requirement for trustees to obtain and hold up-to-date details of the beneficial owners of their trusts on record and to register these annually with HMRC where the trust is liable to pay tax in the UK.

The HMRC penalties for failure to comply could potentially be severe and as such, trustees should ensure they are familiar with these reporting requirements, particularly as the deadlines for registration are fast approaching.

To learn more, please click on the link below to read our e-bulletin on the new registration requirements. Please note that since publication of the e-bulletin, HMRC has extended the deadline for compliance for trusts already registered for self-assessment from 31 January 2018 to 5 March 2018.

Continue reading