SDLTM23071 - Reliefs: Group, reconstruction or acquisition relief

FA03/sch7/para4A deals with certain cases where the group company holding the chargeable interest is transferred out of the original SDLT group within 3 years of group relief being claimed, but FA03/Sch7/Para3 might not apply due to the sequence of transactions meaning that the entity holding the interest is not the original purchaser nor a relevant associated company to the purchaser.

The section applies where:

  1. there is a change of control of the purchaser
  2. within three years of the effective date (or pursuant to arrangements within three years)
  3. which does not trigger para 3 clawback and;
  4. there was at least one prior transaction involving the acquisition of the same interest or a derived interest within the three years prior to the change of control where group relief was claimed.

Where these conditions are met the clawback provisions are applied as if the parties were vendor of the earliest previous transaction and the purchaser of the latest transaction.

An example of where this provision would apply is where the following steps take place:

  1. Company A owns company B which owns company C.
  2. Company A transfers a chargeable interest to company C claiming group relief (the drop).
  3. C subsequently transfers the same chargeable interest or a derived chargeable interest to B (the bounce).
  4. A transfer the shares in B to a third party purchaser within 3 years of step 2.