The latest step in the legal challenge to Chancellor George Osborne’s proposal to limit landlords’ mortgage interest tax relief comes in the next 24 hours or so when the application to seek judicial review is filed.
Landlords Steve Bolton and Chris Cooper are arguing for a review of section 24 of the Finance (No. 2) Act 2015 - which includes the proposed restriction of mortgage interest tax relief at a basic rate, even for higher rate-paying landlords.
Part of the process in seeking a judicial review of Osborne’s proposal involved the landlords’ legal team - Omnia Strategy, led by Cherie Blair QC - contacting HMRC with the basis of its case. This took the form of a 12-page document ‘Pre-Action Protocol for Judicial Review’ which we reported on last week.
Osborne proposes in his Finance Act 2015 that some individual buy to let landlords would not be able to deduct full mortgage interest costs from their rental income before calculating a taxable profit. However, Omnia tells the HMRC that it believes this discriminates against individual landlords by denying them the same rights as, for example, large scale corporate and institutional landlords which can "set their finance costs off against their income and be taxed only on their profit".
HMRC has now responded to the landlords’ legal advisers - the contents are not being made public.
However, the landlords have posted on the campaign Facebook page the following message, calling for continued support and information relating to the case:
“Everyone is working hard refining the relevant documents, gathering expert statements and background research. Whilst we are getting access to some good case studies from people living outside of the UK but in EU countries, more would be better, so please keep them coming. We will file the application by Wednesday and keep you posted.”