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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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Reliefs: Group, reconstruction or acquisition relief

Purchaser ceases to be a member of the same group as the vendor within 3 years, property transferred to another group company

C Ltd is 100% owned by B Ltd. B Ltd is 100% owned by A Ltd. All three companies form a group for the purposes of Stamp Duty Land Tax.

A Ltd (the vendor) transfers the freehold interest in a parcel of land to B Ltd (the purchaser) for no consideration on 25/06/04. This is the relevant transaction. The market value of the freehold interest is £1,000,000 on 25/06/04. B Ltd claims group relief in respect of the transfer.

B Ltd then transfers the freehold interest to C Ltd for £250,000 on 19/10/04. The market value of the freehold interest is £1,100,000 on 19/10/04. C Ltd claims group relief in respect of the transfer.

A Ltd sells the shares in B Ltd to an unconnected third party on 07/07/06. The market value of the freehold interest is £1,750,000 on 07/07/06. As a result of this sale of shares, B Ltd leaves the group on 07/07/06 (and C Ltd goes with it at it is a 100% subsidiary of B Ltd).

As the purchaser (B Ltd) left the same group as A Ltd (the vendor) before the end of the period of three years from the date of the relevant transaction (which period would end on 24/06/07), group relief is withdrawn as no exceptions apply.

B Ltd and its relevant associated company (C Ltd) still hold the freehold interest which was the subject of the relevant transaction (the transfer of the interest from A Ltd to B Ltd).

The Stamp Duty Land Tax payable is that which would have been payable on the original transaction, therefore Stamp Duty Land Tax would be payable on the market value of £1,000,000 (i.e. the market value at the effective date of the original land transaction).

No account is taken on the increase in value of the freehold interest as it is the relief claimed at the time of the relevant transaction that is withdrawn.

Group relief is not withdrawn on the transfer of the chargeable interest from B Ltd to C Ltd as B Ltd and C Ltd are still in the same group as they were when the chargeable interest was transferred to C Ltd.