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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Reliefs: Group Tax Bulletin article: Relevance of arrangements under paragraph 2 to a recovery of tax under paragraph 3 clawback

Paragraph 3 of Schedule 7 is independent of paragraph 2. When an enquiry is made into aclaim the question will be the admissibility of the claim itself in accordance with the statutory provisions. The fact that the arrangements, if carried out as planned, could lead to a recovery or will be exempt from a recovery will not mean that claim itself is allowable except as provided in paragraph 2.

Paragraph 3(1)(a)(ii): Arrangements during the three year recovery period

Paragraph 3 imposes a requirement to make a return (under section 81 FA 2003 see for the withdrawal of relief when the purchaser ceases to be a member of the same group within three years of the effective date of the transaction.

Paragraph 3(1)(a) deals with the recovery period. Paragraph 3(1)(a)(ii) provides thatgroup relief will be recovered if the transfer outside the group after the end of the period is under arrangements made before the end of the period.

“Arrangements” is defined in paragraph 3(4) with the same definition as in paragraph 2.

When there is a transfer outside the group, companies will need to decide whether to makea return under section 81. If the transfer outside the group is after the end of the three year period, companies will still need to consider whether there were arrangements inplace for the transfer during the three year period. To make this decision a proper consideration of all of the circumstances will be required.

HM Revenue & Customs will not assume that just because a company is transferred outside the group shortly after the end of the three year period it will be in accordance with arrangements made within the three year period. We will only seek to argue that there should have been a recovery return if the facts of the case point to there having been such arrangements.