HM Revenue & Customs (HMRC) challenged the artificial and complex arrangements made by the FTSE 250-listed company to avoid paying SDLT on three purchases of development land near Rochester in Kent for a total of more than £32m.
The avoidance scheme sought to use the transfer of property between two sub-companies to avoid the tax.
The First-tier Tribunal decision is likely to have an impact on more than 700 other cases, potentially protecting £65m of taxpayers’ money, HMRC said.
Crest Nicholson argued that HMRC did not have a legal right to make assessments of the tax due because it was out of time to do so, and that it had not carried out its assessments properly.
The judge disagreed with these arguments and found that HMRC had acted correctly throughout.
The judgment reflects HMRC’s tribunal victory in the Vardy case in 2012, when it challenged a similar SDLT avoidance scheme based on complex sub-sale arrangements.
HMRC director general, customer compliance, Jennie Granger, said: “This decision makes it clear that setting up artificial and complex arrangements involving sub-companies to avoid paying tax doesn't work. It's another important success that’s protected taxpayers’ money. This win sends a clear message that tax avoidance is expensive and self-defeating.”
HMRC challenges every tax avoidance scheme it comes across and has a strong record of defeating schemes. When taxpayers choose to litigate, HMRC wins about 80% of avoidance cases heard in court, though many more scheme users choose to settle before reaching this stage by paying all the tax due.