HMRC SDLT: SDLTM21510 – Introduction to pre-completion transactions
Introduction to Pre-Completion Transactions
This section of the HMRC internal manual provides an overview of pre-completion transactions. It outlines the key principles and concepts involved in these transactions, focusing on their implications and processes.
- Definition and scope of pre-completion transactions.
- Key principles governing these transactions.
- Impact on tax calculations and reporting.
- Guidelines for compliance and documentation.
- Examples of common pre-completion scenarios.
Read the original guidance here:
HMRC SDLT: SDLTM21510 – Introduction to pre-completion transactions
Stamp Duty Land Tax (SDLT) and Pre-Completion Transactions
The rules governing Stamp Duty Land Tax (SDLT) for pre-completion transactions are found in FA03/S45 and FA03/SCH2A. These rules apply to agreements made on or after 17 July 2013, with some exceptions for transitional arrangements.
Understanding Pre-Completion Transactions
A pre-completion transaction occurs in the context of a land transaction and is linked to a contract for that transaction as defined by FA03/S44. Essentially, it begins when a purchaser enters into a contract to buy land or property, with the expectation that the deal will be finalised through a conveyance (which is the formal process of transferring ownership of property). This contract is often referred to as the ‘original contract.’
Before the ‘original contract’ is carried out or completed, the purchaser (who is sometimes called ‘the transferor’) may enter into a new agreement. This new agreement allows another individual (known as ‘the transferee’) to request the completion of the transfer of all or part of the property covered by the original contract. This arrangement is recognised as a pre-completion transaction.
Key Terminology
- Original Contract: The initial agreement made by the purchaser to acquire property.
- Transferor: The purchaser under the original contract who may enter into the new agreement.
- Transferee: The new party who gains the right to request the property transfer.
Detailed Guidance on Pre-Completion Transactions
The following sections of this guidance outline the various rules related to pre-completion transactions:
- SDLTM21520 – Provisions regarding pre-completion transactions.
- SDLTM21580 – Additional details on the principles governing these transactions.
Working Examples of Pre-Completion Transactions
The guidance also provides practical examples to illustrate how pre-completion transactions work in real life:
- SDLTM21590 – Example scenario 1.
- SDLTM21600 – Example scenario 2.
- SDLTM21610 – Example scenario 3.
- SDLTM21700 – Additional examples for clarity.
Conclusion on SDLT and Pre-Completion Transactions
SDLT regulations surrounding pre-completion transactions can be complex, but they are essential for anyone involved in property transactions. By understanding the process and terminology, participants can navigate these transactions more effectively.
This guidance lays out the key points and connections that make up the framework for pre-completion transactions under the SDLT rules. Understanding these can help clarify responsibilities and expectations for all parties involved in such agreements.