Energy company chief loses stamp duty battle over £5.2m Grosvenor Square flat

Oisin Fanning, the chief executive of oil and gas company San Leon Energy, has lost a long-running dispute with the tax authorities over a flat in London’s Grosvenor Square. Fanning (pictured) bought the London flat in 2011 for £5.2m, making him liable for £250,000 in stamp duty land tax under the rates at the time. However, he filed a return stating he had no liability. This, according to a Court of Appeal judgment handed down this week, was because he used a scheme via which on the day he bought the property he sold San Leon Energy an option to buy it. The option was sold for £100. According to the ruling, there are 41 other appeals in process with a total value of £4m that hang on the same point: the so-called “transfer of rights” in the SDLT legislation. Under an interpretation of sections 45 and 46 of the 2003 Finance Act, the granting of the option made Fanning’s taxable consideration £100, and potentially postponed any liability as long as the option existed by transferring it to the company but not completing the transaction. HMRC disputed the filing and won its case in the Upper Tribunal. Fanning appealed and the Court of Appeal has now again ruled against him. “Parliament cannot readily be taken to have intended that s45 should provide a means of avoiding SDLT altogether by the simple mechanic of the grant of an option,” the ruling said. Specifically, the judges found that the option in this case did not meet the criteria for “transfer of rights” set out in the legislation. In a similar case in November (Candy v Commissioners of HM Revenue and Customs [2022] EWCA Civ 1447; [2023] EGLR 7), the Court of Appeal ruled against giving property developer Christian Candy a £1.9m refund of SDLT for his purchase of a Georgian villa that he transferred to his brother, Nicholas Candy. Fanning v Commissioners of HM Revenue and Customs Court of Appeal (Jackson LJ, Lewis LJ, Falk LJ) 13 March 2023 [2023] EWCA Civ 263; [2023] PLSCS 48