HM Revenue and Customs has issued a clarification confirming that intra-group transactions are eligible for group relief on Stamp Duty Land Tax. The announcement follows a meeting with representative bodies about the application of a Targeted Anti-Avoidance Rule introduced in 2003 and restrictions on clawback rules.
The tax body has now confirmed that relief is available should a business choose to acquire a property-owning company rather than acquiring a property from a company, and that the property can then be transferred into a different company within the purchasing group.
The purchaser may then wind up or liquidate the acquired company. Further, the tax treatment will be the same even if the purchaser only becomes a member of a group for SDLT purposes as a result of the acquisition.
HMRC has also clarified that selling shares rather than land so as to pay less tax “represents a straightforward legislative choice and is not, of itself, objectionable.”
However, the relief will be available only if “the transactions do not form part of any larger scheme or arrangement which might have tax consequences.”
HMRC met with the British Property Federation, the Chartered Institute of Taxation, the Law Society, and the Stamp Taxes Practitioners’ Group prior to issuing the clarification.
PwC’s Paul Emery, who specializes in stamp duty land tax, was quoted as saying that HMRC had stopped giving clearances while considering the line between genuine commercial transactions and tax avoidance, and that the uncertainty “has gummed up genuine commercial transactions, as businesses assess the tax cost of their real estate transactions and corporate reorganizations.” He added: “HMRC has now acknowledged that buying companies instead of their individual assets is normal commercial practice.”