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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Example 5, Series of assignments

This example covers a number of slightly different scenarios involving a series of assignments of rights. In the first scenario, the final transferee pays an additional amount of consideration.

  • A enters into a sale and purchase agreement with B for some land with a consideration of £1 million. B pays A a deposit of £100,000.
  • B assigns its rights to C for £100,000 and C assigns its rights to D for £150,000.
  • D pays A £900,000 on completion.

Similarly to C in Example 1 (SDLTM21590), D is chargeable under paragraph 4 as the transferee. The chargeable consideration is £900,000 plus £150,000 totalling £1,050,000.

Paragraph 5 applies in the following way. The acquisition by D is ‘the transferee’s land transaction’ (paragraph 5(1)(a)). The assignment from C to D is ‘the implemented assignment of rights’ (paragraph 5(2)). B is the purchaser under a notional land transaction (paragraph 5(1)). C is the purchaser under an additional land transaction (paragraph 5(2)).

The chargeable consideration for B’s transaction - the notional land transaction - is given by paragraph 5(3). It is the £100,000 paid by B to A (amount ‘B’ in paragraph 5(5)) plus the £900,000 paid by D to A on completion (amount ‘A’ in paragraph 5(5)(b)) totalling £1 million. B can claim relief.

The chargeable consideration for C’s transaction - an additional land transaction - is given by paragraph 5(4). It is the £100,000 paid by C to B (amount ‘C’ in paragraph 5(5) - in calculating amount C, ‘the preceding assignment of rights’ was the assignment from B to C (paragraph 5(6)) plus the £900,000 paid by D to A on completion (point (b) under amount ‘A’ in paragraph 5(5)) totalling £1 million. C can claim relief.

In the second scenario, D pays less.

  • A enters into a sale and purchase agreement with B for some land with a consideration of £1 million. B pays A a deposit of £100,000.
  • B assigns its rights to C for £100,000 and C assigns its rights to D for £50,000.
  • D pays A £900,000 on completion.

D is chargeable under paragraph 4 as the transferee. The chargeable consideration is £900,000 plus £50,000 totalling £950,000.

The position of B and C is the same as in the previous scenario.

In the final scenario, there is a series of assignments of rights where D is connected with C. In this example, C gets a good deal from B in an entirely commercial transaction.

  • A enters into a sale and purchase agreement with B for some land with a consideration of £1 million. B pays A a deposit of £100,000.
  • B assigns its rights to C for £50,000 and C assigns its rights to D for nil. C and D are connected.
  • D pays A £900,000 on completion.

D is chargeable under paragraph 4 as the transferee. The chargeable consideration is £900,000 plus nil totalling £900,000. But the minimum consideration rule applies (paragraph 12(2)). Both the first and second minimum amounts are £950,000 (see below) so D is chargeable on £950,000.

The position of B and C is similar to the earlier examples.

The first minimum amount is given by paragraph 13(2). C is ‘T’ (‘Condition B’ in paragraph 13(3)) and C is also ‘the first T’ (paragraph 13(2)). So paragraph 13(2) picks up only the £50,000 paid by C to B plus the £900,000 payable on completion, and not the full £1 million under the contract between A and B.

The second minimum amount is given by paragraph 14. The relevant parties are C and D, not B (paragraph 14(4)). The net amount of consideration given by D is £900,000 and the net amount of consideration given by C is £50,000 (paragraph 14(2)). So the second minimum amount is £950,000.