Read the original guidance here:
HMRC SDLT: SDLTM23080 – Reliefs: Group, reconstruction or acquisition relief

Group Relief: Withdrawal Situations When Relief is Not Withdrawn

Group relief is a mechanism that helps businesses avoid paying stamp duty when they transfer assets, such as shares or businesses, between companies that are part of the same group. However, there are specific situations when this relief is not withdrawn, even if the purchaser stops being a member of the same group as the vendor.

When Relief is Not Withdrawn

You may not lose the group relief under the following circumstances:

1. Vendor Leaves the Group

• If the vendor leaves the group, the relief remains in place. This means that the purchaser still benefits from the relief even though they and the vendor are no longer in the same group.
• This situation can happen if, for example, a share transaction causes the vendor or another company higher up in the group to cease being part of the same group as the purchaser.
• For additional details on this point, refer to the relevant guidance and FA03/Sch7/para4Za.

2. Winding Up the Vendor or Another Company

• Relief will not be withdrawn if actions taken to wind up the vendor or a company above the vendor in the group lead to the purchaser ceasing to be a group member.
• A company is considered above the vendor if the vendor or another company above it is a 75% subsidiary of that company.

3. Share Acquisition by Another Company

• If another company, called the acquiring company, buys shares that meet the conditions for stamp duty acquisition relief under FA86/S75, the purchaser still qualifies for relief.
• For this to apply, the purchaser must remain a member of the same group as the acquiring company immediately after the share transaction.

4. Transfer of the Vendor’s Business

• Relief is also not withdrawn if the purchaser’s exit from the group is due to the transfer of the vendor’s business to another company that meets the eligibility criteria under FA97/S96 (specifically for the demutualisation of insurance companies).
• The conditions for relief must be satisfied, and the purchaser must remain a member of the same group as the acquiring company right after the business acquisition.

Conditions for Potential Relief Withdrawal

Even in cases where relief initially remains, it might be withdrawn if the purchaser ceases to be part of the same group as the acquiring company under certain conditions:

• This assessment will occur if the purchaser exits the group within three years of the transaction’s effective date.
• The purchaser’s departure can occur as a result of pre-arranged plans established before the end of this three-year period.

Requirements for Holding Chargeable Interest

For the potential withdrawal of relief to be evaluated, the purchaser or a relevant associated company should:

• Maintain ownership of the chargeable interest obtained from the initial transaction or hold a derived chargeable interest. For instance, if a head lease is acquired, the reversion of any sublease tied to that head lease counts as derived.
• Ensure that the chargeable interest has not been acquired at market value through another chargeable transaction where group relief was available but not claimed.

Understanding Relevant Associated Companies

A relevant associated company refers to a firm that is part of the same group as the purchaser but ceases to belong to the same group as the company that acquired the shares or the business. This condition becomes significant when determining the potential for relief withdrawal.

When looking at group relief, it is essential to keep these scenarios in mind, as they define when the relief might still apply and when it can be reconsidered for withdrawal.