Why is Lawbird Legal Services running this legal notice?
Lawbird is not an agent for the Spanish Tax Office nor is attempting to steal customers from other firms. However, Lawbird does consider that any offer for a legal service or product that is not lawful should be reported, and this is exactly what the Legal Notice is about.
The offer by Wincham Consultant Limited is one of such offers for it directly contravenes the opinion of the Spanish Tax Office. Therefore, Lawbird considers it a duty to inform the public in general that any person that buys into the “Wincham scheme” should be aware that it is not acceptable for the Spanish Tax Office.
What has Lawbird done about this is in the past?
Lawbird already warned the public against this scheme twice, in January 2010 and in December 2010. There was no response from Wincham other than a vague statement indicating that over the years, they had attended very happy clients who were successful in avoiding IH taxes, legally.
Why is the “Wincham scheme” not tax compliant?
The Spanish Tax Office has ruled that “…there cannot be a favourable response by this Tax Department in relation to the lawfulness of the scheme.” This should be enough for Wincham to withdraw their scheme and offer an explanation to their clients. The same obviously applies to any firm that is offering the same type of scheme.
Any person who has inherited shares of a UK Limited Company that owns Spanish property, and has not declared it in Spain, is in breach of Spanish tax laws. It is however quite possible that the Spanish Tax Office was never made aware of this and thus, the beneficiary got away with not paying IHT.
It is however a very serious mistake to confuse non-disclosure of a taxable event, with exemption thereof.
Non-disclosure can operate as a means to avoid this tax where the beneficiary avails of the current Statute of Limitations (4 years since the last day for voluntary payment of taxes, or 4 years and 6 months since death).
- 12-11-2013 – Tax Office Binding Consultation on Wincham like schemes (Spanish – PDF 347 kb)
Is it also illegal to own property via a UK Limited Company?
Not at all. In fact, it may have some benefits as opposed to owning property outright. What is illegal is using it to avoid the application of Spanish Inheritance Tax laws on the [erroneous] understanding that by transferring a property into a UK Limited Company, IHT can be legally mitigated.
What can I do now?
Any firm providing a service that happens to have misled the public should to the following:
- Refrain from offering the service in future.
- Offer an apology to existing customers.
- Offer compensation package.
In principle, you could claim from the service provider all the costs that you incurred in when transferring your property into the company and, logically, we advise you to do so. Secondly, you should advise your beneficiaries of the content of the Spanish Tax Office ruling who can then seek, if and when they deem it appropriate, independent legal and tax advice in respect to the new IHT scenario.
It is common knowledge that the Hacienda has made several rulings which have had to be reversed.
Having met both Roaches I would be inclined to take this Lawbird piece with a large pinch of salt.
D P D
MD Sierra Properties