SDLT
and Investment Property
Patrick Cannon, 15 Old Square
www.patrickcannon.net
Old ‘Split Title’ Structures
► Re-uniting
legal and beneficial interests
► What to do?
► Use of SDLT 60 self-certificates
Beneficial Owner
Nominee
Company
Whiteacre
Legal title
Partnerships
►A
and B set up a partnership. A contributes
land worth £10m, B contributes £5m cash
and the £5m is repaid to A so that both
partners have contributed a net £5m.
► How does new para 17A, Sch 15 FA 2003
apply? – withdrawal of money within 3
years of contribution of land
Para 17A problem on way in
A puts in land £10m
B puts in cash £5m
£5m out
Partnership
Tax on 50% of £10m
+ 50% of £5m
under para 10 +
£5m under 17A?
Para 17A problem on way out
A takes out remaining £5m
B puts in remaining
£5m and takes land
out
£5m cash in and
£10m land out
£balance of £5m cash
out
Partnership
Tax on 50% of £10m
+ 50% of £5m
under para 18 +
£5m under 17A?
Sub Sales
A
£100
B
£150
C
Sub-Sales and Development
Scenarios
► Agreement
for leases in development
agreements
► When lease is granted? Overlap credit for
rent but what about the premium?
► What if developer nominates an investor to
take grant of formal lease? SDLT x 3?
► Vendor/builder agreements
► Purchaser/builder agreements
Leases and development scenarios
Freeholder
Agreement for lease
Developer
Cash
Formal lease
Cash
Occupier
Overage Issues
► Pay
tax upfront and then adjust within 30
days of overage event
► ‘Contingent’ – assume payable
► ‘Uncertain’ – use reasonable estimate
► ‘Unascertained’ – reasonable estimate
► Deferment of tax
► Can you discount for likelihood of payment?
► Continuing legal liability for overage on
disposal of the land
Group Relief Mini-GAAR
►
New sub-para (4A) of para 2 Sch 7:
Group relief not allowed if transaction–
(a) Not bona fide commercial reasons, or
(b) Forms part of arrangements where a main
purpose is the avoidance of liability to tax
How much of a threat is this really?
Possible ‘White List’?
SDLT problems with
chattels
► Box
1 of SDLT 4 v2 asks you to state the
consideration apportioned to ‘chattels’ on a
business sale
► How to value chattels? Auction room; Special
purchaser; Retail?
► Enquiries about sales at or just under the
threshold points: £60k, £250k and £500k
► Goodwill – inherent or moveable? Morvic Pty Ltd v
Commissioner of State Revenue (Vic) (2002)
Certificates of Value v
Linked Transactions
► ‘Larger
transaction or series of
transactions’: Stamp Duty
► ‘Single scheme, arrangement or series of
transactions’: SDLT
► Classic 5 houses at £120,000 each?
► Box 13 on form SDLT 1
► Are non-land transactions ‘linked
transactions’? Building agreements?
► Buy to let investors and agencies problem
Disclosure and SDLT Returns
► HMRC
enquiries in SDLT
► Langham
► SP
v Veltema
1/06
► Sale retentions?
SDLT Scheme Disclosure (1)
► From
1 August 2005 for commercial
property of £5m or above
► Arrangements enabling an SDLT
advantage
► No reference number procedure
► No premium fee or confidentiality
filters
► Time limits
SDLT Scheme Disclosure (2)
► No
‘White List’
► The Excluded Arrangements
► The Listed Steps A to F
► Rules 1 and 2
► Inclusion of unlisted step
SDLT
and Investment Property
Patrick Cannon, 15 Old Square
www.patrickcannon.net