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HMRC internal manual

Stamp Duty Land Tax Manual

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

Reconstruction and acquisition relief: Withdrawal: Non-exempt transfer following an exempt intra-group transfer FA03/SCH7/PARA11(1)

This subsection applies to the withdrawal of reconstruction or acquisition relief where

  • a chargeable interest has been transferred under an exempt intra-group transfer and relief has not been withdrawn due to FA03/SCH7/PARA10(4). See SDLTM23240 
  • there is a subsequent non-exempt transfer whereby a company holding shares in the acquiring company leaves the same group as the target company

The effect is to withdraw relief when the chargeable interest originally with the target company could (but does not have to) come under control of someone outside the group as a result of a company originally in the group (and which holds shares in the acquiring company) leaving the group.

Withdrawal of reconstruction or acquisition relief occurs where

  • reconstruction or acquisition relief has been claimed by the acquiring company on a relevant transaction
  • that relief has not been withdrawn because control of the acquiring company changed as a result of an exempt intra-group transfer
  • a company that holds shares in the acquiring company (or that are derived from shares to which the exempt intra-group transfer relates) subsequently ceases to be a member of the same group as the target company

    • before the end of a period of three years beginning with the effective date of the relevant land transaction (that is the date of the transaction which originally transferred the chargeable interest)
    • in pursuance of or in connection with arrangements made before the end of a period of three years beginning with the effective date of the relevant land transaction

For withdrawal of the relief to have effect, at the time the other company ceases to be a member of the same group as the target company, the acquiring company (or a relevant associated company) must hold a chargeable interest that

  • was transferred to the acquiring company by the relevant land transaction
  • is derived from the interest that was transferred

and

  • the chargeable interest has not subsequently been acquired at market value by means of a chargeable land transaction where reconstruction or acquisition relief was available but was not claimed

Reconstruction or acquisition relief in relation to the relevant land transaction (or an appropriate proportion of it) is withdrawn and Stamp Duty Land Tax (SDLT) becomes chargeable.