HMRC SDLT: SDLTM09190 – Meaning of ‘involved in connection with’: Section 75A (1)(b)

Principles and Concepts of SDLTM09190

This section of the HMRC internal manual explains the interpretation of the phrase ‘involved in connection with’ as used in Section 75A (1)(b). It provides guidance on how this phrase is applied within the context of tax regulations.

  • Clarifies the meaning of ‘involved in connection with’.
  • Discusses its application in tax legislation.
  • Offers examples to illustrate the concept.
  • Guides HMRC staff in applying this section correctly.

Understanding ‘Involved in Connection With’ for Scheme Transactions

This page was created on 15 January 2020 and updated on 14 May 2021.

What Are Scheme Transactions?

Scheme transactions occur during the exchange of a chargeable interest between parties involved, generally referred to as V (the seller) and P (the buyer). Specifically, these transactions relate to the disposal of V’s chargeable interest and the acquisition of that same interest, or one derived from it, by P. For detailed information about scheme transactions, refer to SDLTM09170.

Examples of Relevant Transactions

Various types of transactions might fall under the category of scheme transactions if they influence the transfer of chargeable interest. Here are key examples:

  • Transactions affecting transfer: Any transactions directly affecting how the chargeable interest is transferred from V to P may count as scheme transactions.
  • Contextual transactions: Transactions that provide context for P acquiring V’s chargeable interest, or a related interest, are likely to be included as well.
  • SDLT implications: If a transaction influences the amount of Stamp Duty Land Tax (SDLT) payable, it is likely a scheme transaction.

Determining Connection in Transactions

A transaction does not automatically qualify as ‘involved in connection with’ just because it exists within a series of transactions. However, if a particular transaction step is essential for achieving the overall outcome of a series, it will likely meet the connection test. Therefore, this transaction will be considered part of the processes that facilitate the transfer of V’s chargeable interest, or an interest derived from it, to P.

Commercial Interdependence

When two or more transactions rely on each other to succeed, they are likely to be seen as involved in the disposal and acquisition of the chargeable interest. Such interdependent actions contribute to the understanding of scheme transactions.

Factors to Consider for Scheme Transactions

When figuring out if a transaction counts as a scheme transaction, it is important to consider the complete facts surrounding how P acquires the chargeable interest. The following factors should be taken into account:

  • Planning involved: Think about the planning that went into the transaction. What was the intent behind the planning?
  • Step relevance: Evaluate how this particular step relates to the disposal and acquisition of the chargeable interest.
  • Proximity of steps: Look at how close together the transaction steps are in time and purpose. Are they occurring in quick succession, or is there a substantial delay between them?
  • Reasons for particular steps: Consider why each step was carried out and the overall intention behind them. What was the goal of the transaction?

It is through these considerations that one can correctly assess whether a transaction is ‘in connection with’ the disposal and acquisition of a chargeable interest.

Conclusion of Assessment

As we explore the principles behind the connection in transactions, it is clear that understanding the broader context and individual details will help in determining if a transaction constitutes a scheme transaction. Paying attention to the specific factors at play ensures accurate outcomes in relation to Stamp Duty Land Tax obligations.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM09190 – Meaning of ‘involved in connection with’: Section 75A (1)(b)

Search Land Tax Advice with Google Site Search

I am here to help. I offer free expert advice to help you understand your land tax obligations, rights, and entitlements.

Our fees come from no-win, no-fee stamp duty claims, and advice to lower your land tax liability under some circumstances.

Contact me below

Speak with Nick Garner

To discuss your stamp duty rebate case
call today:
0204 577 3323

Written by Land Tax Expert Nick Garner.
See free excerpts here.