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Less Tax For Landlords – The Flawed Business Property Relief Claim

We are writing this article as a result of the extensive enquiries we have received from Landlords who engaged in planning offered by Less Tax for Landlords and the Bailey Group.

HMRC’s view (and that of every other tax expert) is that the planning does not work. HMRC’s views are set out in Spotlight 63. They can be seen here.

In this article, we will look at Business Relief, explaining what it is, when it applies, what LT4L and the Bailey Group have told their clients and why their view is incorrect.

What is Business Relief

Business Relief (formerly known as Business Property Relief) reduces the value of business property for inheritance tax. It is available on the transfers of business assets during lifetime or upon death. To qualify, the business asset must usually have been owned throughout the two years before death or transfer.

There is no Business Relief if the business or company is one of ‘wholly or mainly’ in dealing in securities, stocks or shares, land or buildings or in the making or holding of investments.

A business that only generates investment income will not attract BPR, so this excludes:

  • A residential or commercial property letting business.
  • A property dealing business.
  • A serviced office business.

This means relief is not available to landlords with rental property.

The legislation is contained in Section 105(3) and (4), IHTA 1984.

In deciding whether a business consisted “wholly or mainly” of one or more of these prohibited activities, the courts will look at the business in the round, taking into account all of its activities both at the date of the transfer and over a reasonable period of time before the transfer (which may be several years), to see if one or more prohibited activities predominate – see the case of  George v IRC [2003] EWCA Civ 1763. This means that the test will be applied to the specific facts in each case. Most of the case law considering the ‘wholly or mainly’ test has looked at whether a business is mainly involved in investment activity rather than trading or service provision. 

It therefore seems incontrovertible that BPR or Business Relief is NOT available to Landlords. It defies belief that Chris Bailey, LT4L and the Bailey Group told clients that Business (Property) Relief was available and that the deceased’s estate would not be met with a significant Inheritance Tax liability upon the death of the deceased.

The (Flawed) Basis of the Advice given to the participants in this planning

We must repeat that there is not one tax professional who agrees with the assertion of the availability of Business Relief.

The following is an example of a discussion between Chris Bailey and a tax professional who questioned this aspect of the planning.

Trusted Advisor: You indicated that by structuring the property business in the particular way that you do, you create a trade which would benefit from BR, giving IHT exemption after 2 years. Business relief is not available for businesses which wholly or mainly involve the making or holding of investments. HMRC considered the holding of rental properties an investment business, which I appreciate is a business and can qualify for s.162 TCGA, but regardless of whether it qualifies for incorporation relief is specifically excluded from Business Relief under s.105(3). As such, unless the business of the LLP relates more than 50% to something other than the holding and letting of residential property, then I don’t see how it can qualify for BR, particularly when 100% of the income, management time and expenditure relates to the letting of rental properties.

Chris Bailey: The LLP holds the equity and not the properties – so it cannot be classed as an investment. The owner of the properties will not qualify for BR on the properties, but on the equity.

Trusted Advisor: I don’t understand how holding equity in a property ‘cannot be classed as an investment’. The case of M ROSS v HMRC (2017) confirmed that the exploitation of land in return for rent is still an investment business (this was an FLH (Furnished Holiday Let) case so related to a business that tax law recognises as a trade) and denied business relief. What is the business doing which is not the exploitation of land which would elevate the activity beyond that of a furnished holiday let? Caselaw in recent decades has been very clear that a business must offer significantly more than just the exploitation of a proprietary interest – what additional services do you suggest are being provided by the business, which means it’s not an investment?

Chris Bailey: Once again, unfortunately, we have had clients die during the time that they have been clients and HMRC have accepted all of our Probate calculations based on the above. The cases range from small cases (about £1m assets) to larger cases in excess of £5m assets.

Elysium Law have been approached by clients who, having submitted the claim for Business Relief as advised by Chris Bailey et al via Accountancy and Legal Solutions UK ( which is now OCG Legal and part of the Less Tax for Landlords group of companies), have now received a review of the claim.

So, does it work? – No

Here is an extract from HMRCs letter to the client (redacted to protect any identity:

“The executors returned business assets valued at REDACTED on the IHT400 reporting the IHT Account for REDACTED’s estate. The IHT400 return shows that business property relief was claimed against the full value of these assets.

I am aware that Accountancy and Legal Solutions UK have provided advice to other taxpayers with similar investment businesses in respect of Business Property Relief claims and that those claims have been determined invalid (Our emphasis). Therefore, I am conducting a review to confirm the validity of the Business Property Relief claim in respect of REDACTED’s estate.

REDACTED’s IHT400 return states that the business assets comprised a property management and development business. I have conducted a review of the deceased’s individual tax returns and the tax returns of both REDACTED Ltd and REDACTED LLP but have not been able to identify any evidence of business activity beyond the holding of property as investments.”

HMRC are now claiming the IHT on the full amount, which runs into millions of pounds, in addition to interest on the unpaid IHT, which is racking up at a significant daily rate.


  • The planning does not work and if you have engaged in it, you will suffer losses;
  • Elysium Law has now been approached by numerous clients who have submitted claims for BPR during probate that have been rejected;
  • The deceased’s estate not only faces a significant increase in the IHT payable but also considerable interest, which is increasing daily as well as penalties;
  • We have not seen any advice from Chris Bailey or LT4L to contradict HMRC and Elysium Law believe that the Executors who have submitted claims for relief as a result, have a claim in professional negligence.

Elysium Law has an outstanding track record of bringing, defending, and settling high-value and complex cases.

Contact us today for more information if you have been affected, completing our enquiry page or call us at 0151-328-1968

CGT Rebasing – Why Less Tax For Landlord’s Planning Doesn’t Work

Elysium Law has posted several articles on this issue in recent weeks. Since HMRC’s Spotlight 63, we have been continuously approached by landlords who have entered into the planning with LT4L, Chris Bailey or the Bailey Group and they are concerned as to what the best course of action to take is.

At this point, it is probably wise to step back and look at the planning itself and why HMRC says it doesn’t work.

We will break down the key aspects of the planning and the claimed advantages of using it as well as providing HMRC’s view and our opinion of that.

The Structure

By now, especially as you may have used the planning, you will likely be familiar with the structure of the planning. Simply put:

  1. The Landlord (and/or family members) set up a Limited Company and an LLP with the Limited Company as a Corporate member of the LLP.
  2. The Landlord transfers their properties into the LLP and then the Landlord as an individual member of the LLP allocates profits to themselves remaining basic rate taxpayers, excess profits are then allocated to the Limited Company.
  3. The Corporate Member then claims a deduction for finance costs.

The Claimed CGT Advantages

LT4L and Chris Bailey claim that the planning results in a Base Cost Uplift to for Capital Gains Purposes to the date of transfer to the LLP

This means that when you come to sell the property, the Capital Gain is calculated on the value when the property was transferred into the LLP, which ordinarily will be higher than when you originally purchased it. The claim is therefore that this will result in a lower gain and consequently lower CGT being paid.

Our view is that LT4L’s planning is based on a total misconception that Incorporation Relief applies in this instance.

Our Analysis

If on the transfer into the LLP an element of Capital is transferred to the Company, then this element would be rebased for the Company, but that would also trigger an immediate CGT charge to the Client. Any disposal of a property from the LLP is treated as transparent and therefore the Client’s base cost is used to calculate CGT. HMRC explains this in example 2 here, which is taken from their Capital Gains Manual.

It is claimed by the scheme promotors that the Incorporation Relief rules apply here. To clarify HMRC states regarding Incorporation Relief:

“you may be able to delay paying Capital Gains Tax if you transfer your business to a company in return for shares”


The fundamental flaw here is that you are not transferring your business to a COMPANY in exchange for SHARES, you are transferring it to an LLP – under a Trust arrangement, an entity which does not have shares.

The following questions regarding CGT rebasing were put to Chris Bailey by a trusted colleague of ours.

Trusted Advisor: “You advised that on the transfer into the LLP the properties would be rebased for CGT purposes. I questioned this and although I appreciate that they would be recorded in the LLP accounts at fair market value, on a disposal of a property the LLP would be treated as transparent and as such CLIENT’s base cost would be used for the purposes of the CGT calculation. You advised that this wouldn’t be the case and that he would only be subject to CGT on any growth from the date of contribution into the LLP. I can see that on the transfer into the LLP if an element of capital is transferred to the Company then this would rebase that element for the benefit of the company, but it would also trigger CGT on CLIENT’s disposal to the company. So, on the basis that no CGT is triggered on the transfer into the LLP, I assume that all capital is retained by CLIENT. This is demonstrated in HMRC example 2 on the attached: where it demonstrates that the base cost for the disposal is the original base cost (not the uplifted market value).” (Trusted Advisor)

Chris Bailey: “An LLP is an incorporated partnership and as such the incorporation relief rules can be applied”.

Trusted Advisor: “How can incorporation relief apply to an LLP? Incorporation relief requires a person to transfer a business to a company in exchange for shares. The LLP is a corporate body, but it is not a company and cannot issue shares so I can’t see how this could apply or the impact it would have on CLIENT’ CGT base cost. Please can you clarify?”

Chris Bailey: “The LLP’s capital account is increased by the level of the equity. The same rules apply as in a company environment, in that if the LLP is closed down then the CGT would become payable – just as in a company environment.”

As you can see, the question remains unanswered.

Elysium Law has spoken to multiple individuals who used this planning and subsequently received a revised and unexpected CGT calculation from HMRC on the basis of the original value of the properties, not their rebased value as claimed by Chris Bailey.

This of course has resulted in a very large tax charge and had the individuals been aware, it would certainly have affected their decision to sell the properties.


Despite LT4L and Chris Bailey’s claims that there is a CGT Base Cost Uplift, Elysium Law has now been approached by numerous clients who have now had to pay CGT from the date of purchase of the assets, not the uplifted value.

We have seen no advice from Chris Bailey or LT4L as to what they should do, and our view is that they have a claim in professional negligence. Elysium Law has an outstanding track record of bringing, defending, and settling high-value and complex cases.

Contact us today for more information if you have been affected.

OCG Accountants: Their Advice To Do Nothing, Requests For Disclaimers and the Unanswered Questions

Elysium Law has received a number of requests for legal advice as to what to do in the face of the latest letter sent by Chris Bailey (of Less Tax for Landlords and the Bailey Group) on behalf of OCG Accountants.

The letter sent to their clients – which we are still considering in more detail – raises two points of concern.


Given our experience in professional negligence claims, my colleague Ruby Keeler-Williams previously advised that advice from between Leading Counsel was NOT one that could be relied upon by the clients of Chris Bailey, LT4L or any other who sought advice. WE WERE CORRECT.

At the time of writing the article we had not seen any disclaimer. In their letter to their clients, OCG accountants set out extensively the excellent background and qualifications of Leading Counsel. However, we can now confirm that this caveat was provided further in the letter:

“We are writing this letter to you after taking (Leading Counsels) advice. However, (Leading Counsel) has asked us to make it clear to you that he is advising only OCG Accountants Ltd and not any of its Clients and that he cannot, for a number of reasons, himself accept any duty of care to any of you or to any other third party”.

Our previous warning has been proven correct. There is no duty of care between the Clients and Leading Counsel and they cannot rely upon his advice.

Who is advising Clients?

The letter then goes on to say:

“The advice to you in this letter thus comes from OCG Accountants Ltd. If you choose not to follow that advice, then we will need to discuss this with you and potentially ask you to sign a disclaimer that you are choosing not to follow our advice. This has been requested by the insurance broker who deals with our Professional Indemnity Insurance.”

This raises the question – what ‘advice’ are OCG giving their clients and are they insured to give such advice?

Our belief is that nothing contained within the letter amounts to advice, save for one small sentence, which advises Clients to do nothing.

We now ask Chris Bailey, Less Tax for Landlords, OCG Accountants or anyone else connected: What ‘advice’ have you been giving your Clients?

Given neither Chris Bailey or OCG accountants are qualified, regulated legal professionals, any advice given is not subject to legal professional privilege and as such can be disclosed.

The letter sets out Leading Counsel’s view, and Leading Counsel’s view as regurgitated in this letter is NOT advice to their Clients, as the retainer makes clear and CANNOT be relied upon by the Clients at all.

Therefore, every reference to what Leading Counsel has advised is of no consequence to the Clients. Further, OCG are not underwriting the advice via their retainer – the whole thing is arguably a smoke and mirror exercise.

The difference between Advice and Information

In claims of professional negligence, English law distinguishes between advice and information given to a client upon which the client may act if they chose. This is a complex area of law and is beyond the scope of this post.

Here, with one caveat as discussed later in this article, there is no advice given.

OCG are simply rehearsing Counsel’s view to their clients

Whilst Leading Counsel’s qualifications and experience are very impressive, rhetorically why is OCG setting this out to clients who cannot rely upon it.

You can read our previous post for more information on reliance upon Counsel’s advice.

The Caveat – OCG’s advice is to do nothing

Lest it be thought that OCG have not offered any advice to their clients. OCG have offered one piece of advice and that is to do nothing.

That one small piece of advice in the letter that may have significant consequences. It is predicated upon the basis that the client has received a nudge letter re Spotlight 63 (some clients of course having not):

“…we advise you on what should be your general response to such a letter…  do nothing in response to HMRCs letter.”  (our emphasis)

That advice does not tell you either:

  • What to do if you have not received a letter;  

and more importantly:

  • What the potential consequences are should you not respond either to the letter or to HMRC’s Spotlight 63 registration.

No doubt experienced tax advisers, with whom Elysium Law are currently working, will have far more questions and we are happy to receive them and expand the post.

The Request for a disclaimer – the iniquity of the uniformed choice

In our view, what seems to be iniquitous here is that Clients who are facing unknown consequences have so far received no advice from Chris Bailey, Less Tax for Landlords or OCG Accountants as to the way forward. The Clients are now given a stark choice with uninformed consequences – to sign or not to sign the disclaimer.

Elysium Law assumes (albeit OCG do not specify this) that this is an attempt to bar clients from bringing a claim under OCG Accountant’s Professional Indemnity Insurance should the clients chose not to follow the only piece of advice in the letter; namely to do nothing with regards to Spotlight 63, and should they go to independent and more experienced tax advisers who will give proper, informed, regulated advice.

We ask OCG and LT4L – why only now has this iniquity raised its head and upon what basis is the disclaimer sought?

LT4L and OCG Accountants have been aware of HMRC’s Spotlight 63 since at least 4th October 2023.

They ought to have informed their professional indemnity insurers at that stage of the potential of a claim or claims to be made.

Can they confirm to their clients that they have done so? If it is not the case, then why?

We therefore ask Chris Bailey and OCG Accountant the following questions:

(we invite every client of theirs to copy them and send them to Chris Bailey and the other Directors and demand answers)

  • Does the Schedule of Work in the Client Care Letter, which we assume is different to that sent by LT4L, cover work by OCG as regards any investigations/enquiries by HMRC?
  • Given that HMRC are aware of the LLPs registered at the office of OCG Accountants, what is the harm (or adverse consequences) to clients in simply registering under the Spotlight?
  • Do you accept that registration is not an automatic admission of any tax that HMRC claim to be owed?
  • In the event that a Client does not register, will this expose them to issues such as, but not limited to, greater penalties or possibly the unavailability of any settlement facility?
  • If more penalties and interest may (or do) occur as a result of OCG’s advice, will OCG’s insurance cover ALL penalties and interest that accrue to each and every affected client as a result?
  • Was it a term of any original contract and did you point out that any insurance might be invalid, as we believe you intimate, if the clients did not stay with you in the event of HMRC issues? If not, why not?
  • If this is an attempt at variation of the contract or at exclusion for liability in some form of new contract, have you considered the legislation that protects consumers against unfair exclusion clauses and contractual terms?  If not, why not?
  • Rather the discussing matters with individuals, which may go unrecorded in the event of a dispute, will you set out in clear and unequivocal terms so that your clients can take independent legal advice as to the basis of the disclaimer, its validity and consequences if signed?
  • Will you tell your clients that they should take independent advice before signing the disclaimer? If not, why not?
  • Acting in the interest of your clients and not your own interests or the interests of a third party such as the insurance broker or the underwriter, have you considered whether there could be a conflict of interest in asking the Clients to sign this Disclaimer? Clearly it would suit OCG and their insurers if the clients had signed such a disclaimer, but is that in the best interests of the clients? As set out at paragraph 12 of the ICAEW’s Guidance on identifying and managing conflicts, in relation to self-interest conflicts, the test is whether: “…the member (OCG) can give, and be seen by a reasonable and informed third party to give, objective advice or service.’
  • If you assert that you have considered this and are compliant with it, will you let your clients see your written correspondence with the Broker as to why the disclaimer is sought now and prima facie at least, is not in the interests of the plethora of clients you currently represent?
  • Does the Broker have any interest in protecting themselves in making the request?
  • Has the Broker told you why this request is being made, or upon whose authority, and pointed out to you under the original PII policy that your clients will be covered only in the event that you continue to act even in the face of a significant and serious conflict of interest?
  • Finally, please tell us all now the consequences of not signing the disclaimer as regards your Professional Indemnity Insurance and what you will say to those who want to seek advice elsewhere.

Once again, Elysium Law invite each and every client of OCG/LT4L to reproduce these questions and send them to OCG demanding an immediate response.


The January 31st deadline for registration is upon the users of the planning and we have numerous affected who, rather like a rabbit in the headlines, are caught without knowing the proper way forward.

OCG’s advice, namely to do nothing, cannot seriously be considered as responsible advice such as would be expected from a competent, independent advisor unless they have considered and set out the consequences of following their advice.

We urge their clients to write to them, setting out and adopting our questions. In the meantime, seek independent advice on registration and its potential consequences.

Elysium Law has an outstanding track record of bringing, defending, and settling high-value and complex cases. With a significant number of taxpayers likely to be affected following Spotlight 63, we are looking to advance a group claim. Contact us today for more information and a free consultation.

Less Tax for Landlords – Are they acting in the best interests of their Clients?

Elysium Law understands that Less Tax for Landlords and OCG Accountants have instructed Leading Counsel (KC) about the tax issues relating to income tax distribution, questions about which have been raised by various tax professionals concerning the hybrid LLP planning.

HMRC’s view (and that of every other tax expert) is that the planning does not work. HMRC’s views are set out in Spotlight 63. They can be seen here.

We have several observations:

Potential Conflict of Interest

We fail to understand why LT4L, Chris Bailey and OCG Accountants are continuing to advise clients who may have suffered loss as a result of the planning.

Our view is that clients who may have been affected require independent advice in evaluating their options, specifically tax advice and the possibility of bringing legal action against LT4L, Chris Bailey and/or OCG Accountants. Accordingly, ongoing representation represents a conflict of interest, and it cannot confidently be said that LT4L, OCG Accountants or Chris Bailey are in a position to advise their clients independently and objectively.

If you are a client of LT4L, Chris Bailey or OCG Accountants, our advice is that you seek urgent advice from a competent and respected tax professional, register following Spotlight 63, ascertain all or any tax liabilities and seek advice from legal professionals.

Is it only income tax that affects the clients in the planning?

The simple answer is no.

At this stage, we anticipate the potential liabilities are as follows:

  • Income tax payments, including interest and penalties;
  • Capital Gains Tax liabilities (potentially by clients who have sold property) – The transfer into an LLP does not give you a base cost uplift as advised by LT4L and Chris Bailey;
  • Inheritance Tax – It is generally accepted that Business Property Relief cannot be claimed upon the death of the partners under this planning.
  • SDLT – as changes in LLP profit sharing automatically trigger SDLT charges under FA 2003, Sch 15, para 14

Elysium Law has been approached by one client who informs us that he sold properties under the mistaken belief of a CGT uplift which is not available, and he had a revised CGT bill of £800,000. There MUST be others in this position.

Clients should be asking LT4L how their instructions to Counsel deal with this, as on the current information their clients have, they don’t appear to.

Can clients rely on Counsels’ advice – who are the clients for the purposes of the retainer?

Traditionally, it was a ‘selling point’ widely used by the tax avoidance scheme providers that ‘Leading Counsel’ had advised. Mostly these were eminent Counsel, with the providers themselves using these ‘names’ to give a form of comfort blanket to the participants who felt very secure knowing that Leading Counsel had advised.

The problem with this is that no matter who Counsel is or was, Counsel’s instructions and advice are governed by the retainer. Leading Counsel will very likely not be retained to advise you. Counsel will likely be retained to advise LT4L or any other of the named entities. In that case, there is no relationship between you as the end client and Counsel and as such his/her advice cannot be relied upon by you. Counsel, we believe, is instructed to advise LT4L and OCG Accountants and only has a duty of care towards them

An example of this is the recent case of McLean v Thornhill [2023] EWCA Civ 466, where it was held that a tax barrister advising the promoter of a tax avoidance scheme owed no duty of care to the tax avoiders who invested in it, even though they had been allowed to see his advice.

In those circumstances, if a client relies on the advice given by LT4L’s KC, and either in the event the advice is not correct, or HMRC does not agree with Counsel’s views, there is no recourse by their clients.

What if HMRC disagrees with Counsel’s views as put forward by LT4L?

If HMRC disagrees with Counsel’s views, the only answer is for you to litigate the matter with HMRC, and this will take considerable time (years) and very significant expense. It is not clear who will pay that expense and it is not at all clear that LT4L insurance will fund this litigation and pay any tax and penalties due to HMRC (as LT4L has informed clients).

The insurance provider will be acting via their solicitors (not via LT4L or any of their representatives) and will not simply ‘payout’ claims. The only way a recovery can be made is by bringing a claim against LT4L and their insurance provider in negligence and breach of contract.

In our further articles, we will demonstrate the effect that relying upon this advice will have on your ability to bring a claim against LT4L or any others who advised that this planning was reliable.

Have the criticisms of the overall planning been answered by LT4L?

The short answer is NO. The informed views namely that the planning does not work, have NEVER been contradicted by Chris Bailey or LT4L since the ineffectiveness of the planning was exposed, principally by Dan Neidle of Tax Policy Associates.


There are time limits to bringing civil claims, including claims made against Insurance Companies. These are known as limitation periods. Once those limits have expired, you have no options open to you and your claims will be time-barred, no matter how well-founded.

You must obtain independent and objective legal advice within the limitation period. LT4L will have a complete defence to any claims brought against them once the limitation period has expired.


The deadline to register for Spotlight 63 is rapidly approaching. If you have been affected, you must obtain independent, objective tax advice now.

Furthermore, Elysium Law is still receiving enquiries from clients affected. You can contact us via telephone or email for a free initial consultation.

Elysium Law has an outstanding track record of bringing, defending, and settling high-value and complex cases. With a significant number of taxpayers who are likely to be affected following Spotlight 63, we are looking to advance a group claim. Contact us today for more information


Elysium Law have been approached by a number of individuals and professional advisers about what is rapidly becoming a serious issue for those who entered planning with Less Tax For Landlords and Bailey Group.

In response to the mounting questions surrounding this issue, we’ve crafted this Frequently Asked Questions (FAQ) article, accompanied by our suggested answers.

Who are Elysium Law?

We’re a BSB Regulated Entity as a Direct Access Barrister firm with litigation privileges, which means that we can do the same work as a regular law firm but with the prestige and expertise of Barrister working directly on your matter, day to day.

We have successfully represented hundreds of people individually and in large groups in complex and high value group litigation.  We are here to help, so please get in touch with us if you’re worried about either of the above matters.

Are there any fees associated with initially getting in touch?

No. At this stage we are inviting potential victims of planning following HMRC’s Spotlight 63 to have an initial consultation with us where we’ll conduct a fact find and discuss the group litigation.

Following this, we’ll register your interest in the group litigation so we can keep you updated regarding our pursuit of the potential claims.

It is important that you appoint a professional tax advisor alongside pursuing any litigation. We are currently working alongside professional advisors.

Will HMRC know I have contacted you?

No. You are entitled to seek advice and we are qualified professional legal advisors and you have legal privilege in all our discussions with you. This means in simple terms that we cannot disclose anything discussed between us without your permission if the communication is kept confidential (apart from if a criminal activity is disclosed).

We’ll advise you further about legal privilege as part of the litigation.

What claims are you looking at?

We’re currently looking at claims in Breach of Contract and Professional Negligence in relation to the planning provided by firms Less Tax For Landlords and the Bailey Group.

Why should I get legal representation sooner rather than later?

There are legal limits as to when a claim can be made, known as limitation.

In Breach of Contract claims, it is 6 years from the date the contract (letter of engagement) was signed.

In Professional Negligence claims, it is 6 years from the date the loss arose. The date of loss will be different depending on the scheme you entered into. Examples here may include the of the tax return was submitted or the date when any tax liability arose.

We must progress through the pre-action protocols before we can issue a claim and ‘stop the clock’ on limitation. It is vital that there is sufficient time to fully assess the matter, fully advise you, issue a letter of claim on your behalf, allow 3 months for the other side to respond, deal with any letter of response and seek any pre-action disclosure necessary.

Additionally, you will need to mitigate (lessen) your loss, which in this case means settling with HMRC and reaching a tax compliant position. HMRC are aware of the planning and have issued Spotlight 63 and ‘One Too Many’ letters to notify taxpayers. You will need to appoint a professional advisor to liaise with HMRC and settle the matter, which will take time.

Is doing nothing an option if you have not received an HMRC nudge letter?

No . Registration with HMRC should be undertaken.

However we suggest that before doing so, you obtain advice from an experienced regulated tax advisory firm, who will assist you in regularising your tax affairs by advising you on the different tax payable, minimising interest and penalties if applicable and will help mitigate your losses in any claim we can assist with. Our advice is to get expert professional tax advice and subject to that advice attempt to settle with HMRC.

Why is it important to mitigate your loss

The rule of mitigation requires a claimant to take steps to minimise its loss and to avoid taking unreasonable steps that increase its loss. Whether arising from a breach of contract or breach of duty, the injured party cannot claim damages for losses that could have been prevented through reasonable measures.

Here, it will be essential to work in tandem with experienced professional advisors who can settle claims with HMRC.  This will assist us in calculating your losses and allow us to prove that you acted swiftly and responsibly.

What damages will you be seeking?

The damages will be carefully assessed for each client, but we anticipate claims including:

  • The Fees paid for implementing the planning
  • Tax Liabilities (potentially including CGT and SDLT)
  • Any loss relating to mortgage default due to the planning
  • Fees of any professional advisors to settle with HMRC and reach a tax complaint position
  • Accountancy fees regarding the two entities, cessations accounts
  • Legal Costs

What documents will be important?

We would like to see all documentation, but we’re specifically interested in these documents:

The Engagement Letter: The engagement letter is the contractual obligations of the advisor and we need to look at what they have expressly promised to do.

The Tax Advice: You should have been given solid advice that contain risk warnings. In some cases we are aware of, no advice was given. We will look at the content of the advice to see if it is legally sound and look for the risks warning which you should be made aware of. The absence of the latter will indicate whether there is a potential causation issue depending upon the strength of the warning.

Any Scheme Documentation: We need to see how the scheme has been implemented to see if it is technically correct. This includes any partnership documentation, any deeds of trust, any deeds of transfer, etc

Does it matter whether I have fully implemented the planning?

In a matter such as this, there will likely be different ‘classes’ of Claimant depending on the loss suffered.

This will likely be determined by how much of the planning has been implemented at each stage.

Currently, we envisage the following scenarios:

a.           Claimants who have paid fees but not implemented the planning;

b.           Claimants who have partially implemented the planning

c.           Claimants who have fully implemented the planning

How can I contact you?

You can contact us via telephone or email for a free initial consultation.

Elysium Law has an outstanding track record of bringing, defending and settling high-value and complex cases. With hundreds or even thousands likely affected following Spotlight 63, we are looking to advance a group claim. Contact us today for more information

Legal Insights: A Litigation Overview following Spotlight 63

In this article, Ruby Keeler-Williams and Richard Gray of Elysium Law provide an overview of the legal action which can potentially be brought against LT4L and the companies involved within the structure – which is now the subject of HMRC Spotlight 63.

In this article, we’ll give an overview of aspects of the anticipated litigation against scheme providers following HMRC Spotlight 63, with specific regards to various issues that will arise in any claim for Negligence, Breach of Contract and Misrepresentation.

Contractual Position

A professional adviser will enter into a retainer or contract with the client(s) they engage with. The scope of the duties is defined by the retainer letter. A contract contains both express and implied terms. An express term for example, would be the fees paid to enter the ‘planning’. Legally this is known as the consideration and in any breach of contract claim, the claim would naturally include a claim for a return of the fees. An implied term of the contract would be to carry out the contractual duties as expressed by the retainer in accordance with the standards expected of a reasonably competent professional within that field.

Professional Negligence

Given that the duty of care is owed by a professional advisor, there would also be a claim in Professional Negligence. Whilst the formulation of damages claimed are normally different in negligence and breach of contract, in cases such as these, where the loss amounts to professional fees and tax liabilities, it would effectively be the same.

Whilst negligence can be defined as a Breach of Duty of Care owed to the Claimant, which causes Loss and Damage to the Claimant, the position is far from simple.


In bringing a claim in negligence, the elements of causation is a question of fact. A number of elements will be considered by the court which are evidence-based.

For example, if a person has attended a sales fair, has taken a brochure and having read the brochure signs up to the scheme without further discussion or asking questions, the Defendant (who will act by their insurance company solicitors) will claim that the Claimant would have entered into the scheme in any event.

Items promised such as less tax to pay, redistribution of income, business property relief on shares at the specific time, are powerful inducements and the court may view that causation is either not proved, or alternatively that the loss has been contributed to by the negligence of the Claimant themselves (known as Contributory Negligence). Contributory Negligence will reduce the degree of damages which otherwise would have then awarded in proportion to the Contributory Negligence demonstrated by the Claimant.

The insurer’s riposte to any claim will almost certainly be one of causation, asserting that the Claimant would have entered the scheme regardless of what they were told. Items such as the evidence required to prove or disprove the assertion is beyond this article. This is a process which requires full engagement with any would-be litigant who wishes to bring the claim.

Professional Indemnity Insurance

Professional Indemnity (PI) Insurance is a type of insurance designed to protect professionals (such as lawyers, tax advisors, accountants, etc.) from financial losses resulting from legal claims made by third parties. These claims typically arise due to alleged negligence or errors and omissions in the professional services provided by the insured or their employees.

Any claims made will be dealt with under LT4L’s PI policy.

A point to concern for litigators is that irrespective of the strength of the claim, any claim of fraud will invalidate the policy. We have seen cases (in which we were not involved) where the lawyers pleaded fraud and immediately the policy was withdrawn.

In any event, fraud has a very high benchmark and ought not to be pleaded unless there is specific evidence which can be proved on the criminal standard of proof (beyond reasonable doubt). This will not apply this claim and if you are advised that this is a fraud by any other party, then we would reject that assertion.

The Insurance Policy

Elysium Law had been approached by a number of individuals or couples, some of whom have sought a copy of Less Tax 4 Landlords’ insurance policy.

Less Tax 4 Landlords are part of the One Consultancy Group, which includes an accounting firm (OCG Accountants), a mortgage broker (OCG Mortgages), an FCA regulated financial services firm (Phare Financial Services) and an SRA regulated ABS (OCG Legal).

We have had sight of the Professional Indemnity Insurance Schedules for Less Tax 4 Landlords, OCG Accountants and OCG Legal. The Professional Indemnity Insurance Schedules only contain the main limits, sums insured, endorsements and excesses but others will apply and will be detailed in the Policy Document, which we have not had sight of.

It must be noted that when a professional adviser ceases to practice, there must be what is known as run-off cover covering the six-year period after the cessation of the practice.

The Limit of Indemnity

The amount of cover provided under a PI policy is determined by the limit of indemnity. This will usually be set out in the schedule to the policy. The limit may be expressed to be on a “per claim” or “per loss” basis or on an “aggregate” basis or both:

  • ”per claim” or “per loss” means that the limit will be available for each and every claim or loss as applicable.
  • ”in the aggregate” means the limit of indemnity will be available for all claims that fall for cover in that policy period.

It is common to see limits expressed to be both on a “per claim” basis and in the aggregate.

For example, if the limit of indemnity was expressed to be “£100,000 each and every Claim and £1 million in the aggregate”, this would mean there was a maximum limit of £100,000 available for each Claim (as defined under the policy) but insurers would pay no more than £1 million in total for all of the Claims covered under the policy.

In the Professional Indemnity Insurance Schedules for Less Tax 4 Landlords, OCG Accountants and OCG Legal (which are an overview and do not reflect the terms of the entire policy) the limit of indemnity is £2 million for Less Tax 4 Landlords, £2 million for OCG Accountants and £3 million for OCG Legal. We have not had sight of the complete policy and as such cannot comment specifically as to whether this is per claim or on an aggregate basis.

Aggregation Clauses

It is common in a PI policy for there to be an aggregation provision. Such a provision provides for two or more separate claims covered by the policy to be treated as one claim when they have a unifying common factor that links them together.

This is of considerable importance because it is likely that claims in respect of LT4L that arise from the same cause of action will be aggregated, meaning that despite the number of individuals who seek compensation, they will all be classed as one claim.

Clearly, if there were 600 Claimants all seeking £20,000 each, the total claim would be £12 million, which is significantly above the limit of indemnity. In order to minimise their losses, insurers make provision for an aggregation clause which means that they avoid claim such as this.

Experience tells us that LT4L will have a policy with an aggregation clause in it. As yet, we are yet to determine every companies or individuals who have provided planning within the arena to this particular DoTAS scheme. It may be that the accountants and the solicitors concerned will each be liable for their part in the provision and implementation of the scheme and therefore, there would be two policies to attack by this litigation.

As far as challenging the aggregation clause, the position will be dependent on the specific wording of the clause and as such at this stage is not clear and cannot be the subject of accurate comment. Generally, the principles are as follows:

It is crucial to look at the words used in the aggregation provision including whether any of the words used are defined terms. Provisions which seek to unify claims by reference to the same ‘act’, ‘error’, ‘omission’ or ‘event’ have a narrow scope and tend to result in fewer aggregated claims (Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] UKHL 48)

In contrast, provisions which allow for a wider search for a unifying factor such as the same ‘originating cause or source’ are likely to mean more claims can be aggregated together (Axa Reinsurance (UK) Plc v Field [1996] 2 Lloyd’s Rep 223 )

In AIG Ltd v Woodman and others [2017] UKSC 18, the Court held that in order for claims to be aggregated, they must have a unifying factor, such as a common feature, circumstance, or cause.

This was expanded upon in Baines v Dixon Coles and Gill (A Firm) and others [2020] EWHC 2809, in which insurers sought to aggregate claims relating to the theft of client monies by a partner of a firm.

HHJ Saffman provided the following example at paragraph 53 of the Judgment:

“In other words if there is a series of acts A, B and C, it is not enough that act A causes claim A, act B causes claim B and act C causes claim C.  What is required is that claim A is caused by the series of acts A, B and C; claim B is also caused by the same series of acts; and claim C too.”

An example of claims being deemed to have the same ‘source or originating cause’ can be seen in Spire Healthcare Ltd v Royal & Sun Alliance Insurance [2022] EWCA Civ 17, where the Court of Appeal held that several claims against the insured all arose out of the same “source or original cause”, namely, the conduct of an individual in disregarding the welfare of his patients and performing operations on them without their informed consent. The claims could, therefore, be aggregated as one claim so that the £10 million policy limit applied, instead of the aggregate policy limit of £20 million. This decision confirms that the negligent or dishonest acts of one individual can be an originating cause for the purpose of an aggregation clause, even though their negligence may take different or multiple forms.


These will depend upon the specific taxes to be collected by HMRC.

As yet, whilst HMRC have written to people telling them to register if affected by the scheme, there has been no expression of policy with regards taxes they wish to look at collecting. Again, this will be discussed no doubt with the expert selected to liaise with HMRC in any settlement.

Mitigation of Losses

It is important that you demonstrate in any claim that you have tried to mitigate any losses incurred. This should be done via an expert. Damages may be only extra income Tax, interest and penalties for example. If you have been affected, you should seek to instruct a litigator who will compile a schedule of damages each Claimant has incurred.

You will also claim extra accounting fees for the entities involved, your experts fees and of course the consideration (fee) paid to LT4L. These will be set out in a Schedule of Loss and it is more cost effective and easier to mount a claim of significance. In other cases, we have seen individuals taking on the insurance company alone and given the costs of such litigation, their claims have been ignored simply upon the basis that the Claimant cannot afford the costs.


Elysium Law has an outstanding track record of bringing, defending and settling high-value and complex cases. With hundreds or even thousands likely affected following Spotlight 63, we are looking to advance a group claim. We anticipate claims worth tens of millions against LT4L and their insurers.

If you find yourself impacted by the issues discussed, Elysium Law are ready to offer expert guidance and assistance. Please contact us today.

Exiting Tax Avoidance Schemes following HMRC’s Spotlight 63

In this article, Richard Gray and Ruby Keeler-Williams of Elysium Law provide practical guidance for individuals navigating the exit process from tax planning schemes, notably those promoted by Less Tax For Landlords.

Let us start by thanking the CIOT for publishing the letter which is being sent by HMRC following Spotlight 63. This communication sheds light on the potential fallout from the tax planning schemes orchestrated by Less Tax For Landlords (LT4L) and other promoters.

To see this, you can access the article containing the posted letter on the CIOT website: HMRC One to Many letters concerning ‘Spotlight 63’ LLP property tax planning

Elysium Law have been approached by numerous victims of this particular mess and are looking at bringing claims in professional negligence, amongst other causes of action, against the perpetrators. Note, there are in fact a few providers presently in our sights.

One issue that we raised with the professional advisors with whom we work is the policy HMRC are adopting in relation to the recovery of the many specific tax liabilities this scheme will cause.

Following these discussions, we’ve put together this short practical guide for those affected.


Exiting a tax planning scheme such as those implemented by LT4L demands careful consideration and strategic planning, especially in the aftermath of HMRC’s Spotlight 63.

Reassessing the Declaration of Trust

The first crucial step in the exit strategy involves evaluating the effectiveness of the declaration of trust over the beneficial ownership of properties within the LLP. If deemed necessary, a change may be required to shift the beneficial interest back to the individual(s). However, it is essential to note that there are significant considerations in this regard, which we will address shortly.

Income Declaration and Section 24 Implications

Once the beneficial ownership is realigned, landlords must declare the income and expenses on the properties as they did before. This reinstatement to individual ownership brings Section 24 of the Finance Act 2015 into focus, particularly impacting the calculation of taxable profits for those with mortgages.

Liquidation of the LLP and Limited Company

In certain scenarios, the LLP and Limited Company member may need to be liquidated, but exercising caution is paramount. This step should only be taken post-settlement to avoid potential complications.

Potential Pitfalls of the ‘Transfer Back’

One of the critical issues in the ‘transfer back’ process involves the change in the corporate member’s entitlement to profits. The looming question is whether HMRC would perceive this transfer as triggering SDLT or CGT charges. While we remain hopeful that it wouldn’t, seeking professional advice before taking any action is essential. Waiting for HMRC’s confirmation or agreement on any arguments presented is equally crucial.

Filing Returns: Exercise Caution and Transparency

For those compelled to file returns before HMRC confirms their stance, it is advised to base your position on professional advice. Full transparency in filing, accompanied by a clear rationale for the chosen position, is vital. Acknowledge the possibility of amendments and be prepared to provide evidence if HMRC disagrees, as filing without proper advice poses the risk of penalties and additional taxes.


Mixed Membership and Reallocation

In addressing the mixed membership issue, it is anticipated that HMRC may seek to reallocate profits back to individual members. Moreover, there’s a possibility that HMRC might go a step further and consider ignoring the LLP structure entirely, leading to the computation of tax on the individual(s) based on a ‘normal’ basis.

Corporate Income Tax Offset in Settlement

For corporates that have previously paid income tax on profits, there is a potential avenue to offset or include this in an overpayment claim. This can effectively reduce the ‘cash’ cost of settlement, subject to time limits. Similarly, income tax paid by individuals on dividends from the corporate may be repayable, further alleviating the financial impact of settlement.

Inheritance Tax Implications

While we hope that no participants in these arrangements have passed away, considerations must be made. If Business Property Relief has been claimed for Inheritance Tax (IHT), and it is deemed ineffective, HMRC would expect necessary amendments.

CGT and SDLT Liabilities

The transaction and reallocation of profits may have triggered liabilities in terms of Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT). HMRC’s perception of the effectiveness of these events will determine the course of settlement. There’s a possibility (albeit a significant one) that HMRC may choose to ignore these issues. If not, computation and payment of SDLT and CGT become necessary, requiring careful consideration of available reliefs.

HMRC Registration and Policy Pause

While HMRC advises victims of this scheme to register, responsible professionals should encourage compliance. However, we recommend pausing a moment. As of now, HMRC has not disclosed its policy on these matters, making it crucial to stay informed and navigate the registration process with a clear understanding of potential implications.

Next Steps

In the initial phase, Elysium Law strongly advises seeking assistance from a professional adviser. Rushing into decisions without expert guidance may inadvertently lead to the creation of further tax liabilities. A professional adviser can provide invaluable insights, helping you make informed choices tailored to your unique circumstances.

It is highly likely that discussions with HMRC will be necessary to navigate the complexities of settlement and exit. Achieving a clear understanding of the precise terms for both settlement and exit is crucial. This ensures that you can leverage the benefit of any tax already paid, contributing to a smoother resolution of the situation.

Should you find yourself impacted by the aftermath of LT4L and the tax planning issues discussed in this article, Elysium Law is here to offer guidance and assistance. We recognise the complexity of the situation and the potential legal challenges involved, and our team stands ready to advise. Contact us today for advice on your personal circumstances.