HMRC SDLT: SDLTM34490 – Application of exemptions and reliefs: Group Relief

Principles and Concepts of Group Relief

This section of the HMRC internal manual, titled “SDLTM34490 – Application of exemptions and reliefs: Group Relief,” outlines key principles and concepts related to group relief. It provides guidance on how exemptions and reliefs can be applied within corporate groups.

• Details the eligibility criteria for group relief.
• Explains the process of claiming group relief.
• Discusses the implications of group relief on tax liabilities.
• Provides examples to illustrate the application of group relief.

Introduction to Group Relief in Property Transactions

When dealing with property transactions and stamp duty, understanding the role of group relief is important. This section explains how group relief works, especially in relation to partnerships and companies.

Basic Principles of Group Relief

1. Who Can Be a Corresponding Partner:
– Normally, only an individual can be a corresponding partner to a relevant owner. This is crucial in calculating the lower proportions, particularly in Step Two of the calculation. For a diving deeper into these calculations, refer to SDLTM33550.

2. Exceptions to the General Rule:
– There are exceptions where a company can be treated as a corresponding partner. These exceptions are found in Paragraph 12(3) and Paragraph 27A of the legislation.
– More examples showcasing these exceptions can be found in the following references: SDLTM34365, SDLTM34390, SDLTM34430, and SDLTM34470.

Understanding Para 27A and Its Applications

1. When Para 27A Applies:
– Paragraph 27A becomes relevant when a company is connected to a relevant owner and is part of the same group. This scenario ensures that the company is considered during calculations related to the sum of lower proportions.

2. Calculating the Charge:
– According to Paragraph 27A(1), when determining the charge, you apply the rules from Paragraph 12. Here’s how it works:
– The usual charge is reduced to the amount that would have been due if the connected company were treated as a corresponding partner of the relevant owner. This is explained in Paragraph 27A(2).

Modified Group Relief Provisions

1. Reduction in Charge:
– Paragraph 27A(3) introduces a modified version of group relief based on the reduced charge calculated previously. This means that while calculating the liability, the potential deductions available through group relief are factored in.

2. Claiming Group Relief:
– To take advantage of this relief, the partnership must claim it in the land transaction return. This process involves specifying the nature of the relief being claimed.
– Use the code “12” in the land transaction return when making this claim. This indicates to HMRC that you are applying for group relief regarding the reduced charge.

3. Conditions for Group Relief:
– Even when claiming the group relief as mentioned, the usual conditions for group relief still apply. These conditions are laid out in Schedule 7, Paragraph 2. It’s important to ensure that your claim meets these criteria to avoid any complications.

Examples of Group Relief Application

– Consider a scenario where a company A owns a piece of property. Company B is part of the same group as Company A and has a relevant owner status. When calculating the stamp duty for a transaction involving Company A, you can treat Company B as a corresponding partner. Thus, you will use the rules in Paragraph 27A to reduce the charge.

– Let’s say the standard stamp duty charge for the transaction amounts to £10,000 with no consideration for group relief. If the reduced charge under Paragraph 27A indicates a liability of £7,000, the partnership must ensure they claim this reduced amount in their return while using the code “12”.

Regulatory References for Further Information

– For a detailed understanding, including the regulatory framework you need to follow while making these claims, please refer to the specific guidance:
– SDLTM34490 explains further about applying exemptions and reliefs as applied to group relief cases.
– Other references include SDLTM34490 – Application of exemptions and reliefs: Group Relief which expands on the principles described here.

Conclusion

While we have not wrapped things up, it is essential to keep in mind that navigating through these regulations requires careful consideration of both the general rules and the exceptions like those outlined in Paragraph 27A. Always refer to the provided examples and references to ensure compliance and proper application of all reliefs available.

This guidance ensures individuals involved in property transactions remain informed about their responsibilities and the potential financial benefits derived from group relief. Maintain accurate records and adhere to all filing requirements to facilitate a smooth process with HMRC.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM34490 – Application of exemptions and reliefs: Group Relief

View all HMRC SDLT Guidance Pages Here