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HMRC internal manual

Stamp Taxes on Shares Manual

From
HM Revenue & Customs
Updated
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Exemptions and reliefs: reliefs: stamp duty group relief - transfer of beneficial interest

For the beneficial interest to be transferred:

  • the transferor must be the beneficial owner of the property when the document was executed; and
  • the beneficial ownership must pass to the transferee and must be transferred by a duly executed document.

Documents which are not relieved by section 42 include the transfer from a body corporate acting in a trustee capacity (e.g. for a pension scheme). A trustee does not have a beneficial interest in the property.

Where a transfer between associated bodies corporate is in conformity with an earlier contract, the beneficial interest will have passed to the purchaser under the contract. The transfer may still be exempt, however, as it is chargeable on the consideration which was payable under the contract (Escoigne Properties Ltd v IRC [1958] AC 549).

For the purposes of intra-group relief, a company that has entered into an unconditional contract for the sale of property is no longer the beneficial owner of that property (Parway Estates Ltd v IRC [1958] 46 TC 435). A conditional contract may have the same effect if the purchaser can waive the conditions (Wood Preservation Ltd v Prior [1968] 2 All ER 849), or where the vendor has to waive them to sell the property (Brooklands Selangor Holdings Ltd v IRC [1970] 2 All ER 76). The cases seem to follow the general principle that once a contract for sale is executed the property is held in equity by the purchaser. The equitable interest has been held (in Parway, for example) to be equivalent to the beneficial interest. The situation in Scotland is different, for under Scottish Law beneficial ownership remains with the seller until the sale is completed.