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Sadly, but nonetheless unsurprisingly, HMRC has issued a stop notice to Property 118 in connection with their use of a Capital Account Restructure. The full details can be found here.

Dan Needle of Tax Policy Associates commented:

If you did use Property118’s tax planning then you should be alarmed by the stop notice. It’s a very rare use of an HMRC power to require a business to stop promoting a “tax avoidance scheme” that (in HMRC’s view) doesn’t work. If the business continues to promote the scheme then those involved commit a criminal offence.

A stop notice is a serious thing. It has no direct effect on Property118’s clients, but it is a warning that HMRC is likely to challenge their historic tax returns.

I’d strongly suggest someone in this position obtains independent tax advice from a regulated law or accounting firm.

We advised literally 100’s of landlords not to get involved with what in our opinion was a tax avoidance scheme from the outset. From as far back as 2021 we warned clients of the pitfalls. Sadly, but understandably many landlords were caught up in the rush to incorporate following the introduction of section 24 interest relief restriction with promises that they could avoid CGT, SDLT, and create a Directors Loan Account.

In our opinion, this was never going to work. 

Landlords that have been affected or who have been involved in this tax planning are likely to face inquiries from HMRC. Many face ruinous tax and penalties to say nothing of months and months of enquiry from HMRC. Interestingly P118’s response includes requests for more money to help them fund a legal battle against HMRC. One has to question where their PI cover is? 

If you have been affected and are worried about where you stand please get in touch on 01902 711370 or email enquiries@uklandlordtax.co.uk. We can talk you through your case and advise on the options available to you.

Thandi Nicholls Ltd
Creative Industries Centre
Glaisher Drive
Wolverhampton
West Midlands
WV10 9TG