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HMRC internal manual

Stamp Duty Land Tax Manual

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

Reconstruction and acquisition relief: Undertaking

HMRC understanding of what comprises an undertaking for the purposes of Reconstruction or Acquisition Relief.

The term ‘undertaking’ refers to the business, trade or enterprise of the target company which is transferred to (and is then carried on substantially unchanged by) the acquiring company. For there to be an undertaking it is implicit that some business must be carried on.


We view ‘business’ as including ‘every trade, occupation or employment’, so ‘business’ is a very wide term embracing almost every common activity and is much wider than ‘trade’ or ‘profession’ alone.

The carrying on of a business ‘usually calls for some activity on the part of whoever carries it on’ (Lord Diplock in American Leaf Blending Co. v Director General, Privy Council 1978).

It can include a business of making investments where these investments are ‘actively managed’. As the Special Commissioner said in Martin & Another v CIR (SPC5/1995): ‘The mere receipt of rents from let property owned by an individual ‘raises no presumption that he is carrying on a business’ [per Lord Diplock in American Leaf], but where it can be shown that there is a continuing activity on what seems…. to have been sound business principles …’ it is likely that ‘…mere ownership or mere investment…’ may have become a business.

Part of undertaking

Whether the assets transferred comprise part of the undertaking of the target company is largely a question of fact. If what is transferred is capable of existing on its own as a viable ‘business’ then it might comprise part of an undertaking however the mere partition of assets or investments is unlikely to be sufficient.