Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Stamp Duty Land Tax Manual

Section 75A Finance Act 2003, situations where HMRC considers that s.75A applies

  1. V agrees to sell land to X, and X agrees to sell the same land to P which is a partnership where the partners are X and persons connected to him. At the same time as the completion of the V-X contract, the X-P contract completes, this acquisition is effected by means of a ‘transfer of rights’. X argues that no Stamp Duty Land Tax is due as his contract is disregarded by s.45, whilst P argues that no Stamp Duty Land Tax is due per Schedule 15 of FA 2003 given its connection with X. Section 75A applies because HMRC considers that the conditions of s75A 1(a) - (c) are met and that the notional transaction V-P could have been achieved in a more straight forward manner that would not have satisfied s75A(1)(c); Stamp Duty Land Tax is due on the notional consideration which is the full amount of consideration received by V.
  2. V grants a 999-year lease to Nominee for no premium and a peppercorn rent. V assigns the freehold reversion to P for a nominal sum. P pays Nominee £x in consideration of Nominee’s agreement to vary the lease by the insertion of a provision giving the landlord the right to terminate the lease for no payment. P exercises the right to terminate. Under s.75A, the notional transaction is the acquisition of the unencumbered freehold by P and the notional consideration chargeable is £x given by P to Nominee.
  3. V grants a 999-year lease to Nominee for no premium and a peppercorn rent. The lease includes a right for the landlord to terminate the lease on payment of £x to the tenant. V assigns the freehold reversion to P for a nominal sum. P exercises the right to terminate and pays Nominee £x. Under s.75A, the notional transaction is the acquisition of the unencumbered freehold by P from V, and the notional consideration chargeable is £x given by P to Nominee.
  4. V grants a 999-year lease to P for no premium and a peppercorn rent. The lease gives the landlord a right to terminate it within 14 days of the date of grant. P offers to pay V £x if V allows the 14 days to elapse without exercising the right to terminate. V does so. Under s.75A, the notional transaction is the grant by V of a 999-year lease to P and the notional consideration, which is the chargeable consideration, is £x, the amount paid by P and received by V.
  5. V agrees to sell property to X Ltd for £10 million. X Ltd declares a dividend in favour of P, the dividend to consist of the property and to be paid at the same time as completion of the V-X Ltd contract. The contract is completed and the property transferred to P. X argues that the £10 million is not chargeable to Stamp Duty Land Tax as his contract is disregarded under s.45. P argues that there is no Stamp Duty Land Tax charge on the transfer of the property to him because a dividend in specie is a transaction that does not constitute consideration for the purposes of the Stamp Duty Land Tax legislation. Under s.75A, the notional transaction is the acquisition of the property by P, and the notional consideration, which is the chargeable consideration, is £10 million, the amount received by V.
  6. V agrees to sell land to X, and X agrees to sell the same land to P which is a partnership where the partners are X, X1 Ltd. and X2 Ltd. companies connected to X which manage a trust for which X is the beneficiary. V and X enter an arrangement where V settles a nominal amount into X’s trust, thereby creating a connection between V and X as per s.839 of ICTA 1988. The V-X contract completes and at the same time and simultaneously the X-P contract completes. X claims that no Stamp Duty Land Tax is due as his contract is disregarded by s.45 of FA 2003, whilst P claims that no Stamp Duty Land Tax is due per Schedule 15 of FA 2003 given its connection with X. Section 75A applies and the notional transaction involved is V-P Stamp Duty Land Tax is due on the notional consideration which is the full amount of consideration received by V.