HMRC SDLT: SDLTM09300 – Availability of relief: Section 75C (2)

SDLTM09300 – Availability of Relief: Section 75C (2)

This section of the HMRC internal manual provides guidance on the availability of relief under Section 75C (2). It outlines principles and concepts related to tax relief eligibility.

• Explains the criteria for qualifying for relief under Section 75C (2).
• Describes the procedural requirements for claiming relief.
• Highlights potential scenarios where relief may be denied.
• Offers examples to illustrate the application of the relief.

Simplified Guidance on Notional Transactions and Relief Availability

This guidance discusses how relief can be applied when calculating consideration for a notional transaction involving two parties, V and P. This information is vital for understanding the application and restrictions of reliefs in such transactions.

Understanding Notional Transactions

A notional transaction occurs when we consider a transaction that did not actually take place but is treated as if it did for tax purposes. Here, we look at what happens when both parties in the transaction are companies, especially when they belong to the same group.

Key Principles of Consideration Calculation

• Consideration: This is the value that would be exchanged between the two parties, V and P, if the transaction were real. In a notional transaction, this value is calculated by considering the possible reliefs that would apply in an actual transaction.
• Relief Availability: The reliefs that might be available depend on specific conditions and rules related to those reliefs. Each relief has its own set of terms and conditions that determine if it can be applied.

Examples of Notional Transactions and Relief

To illustrate how relief might apply in a notional transaction, let’s look at an example:

Example Scenario

• Imagine a notional land transaction involving two companies, V and P, that are part of the same group.
• This transaction may qualify for group relief, which is a specific type of relief available for companies within the same corporate group.
• However, for group relief to be applicable, certain criteria must be fully met.

Restrictions on Relief Availability

The potential application of group relief will follow strict guidelines laid out in Schedule 7 of the Finance Act 2003. Important considerations include:

• If there are arrangements for a third party to gain control over company P but not over company V by the effective date of the notional transaction, then group relief cannot be claimed.
• This means that if P is at risk of losing control to someone outside the group, the relief intended for group transactions will not be available.

More Information on Group Relief

For additional details about group relief, including examples and the specific restrictions that may apply, you can refer to SDLTM23000 and subsequent guidance pages.

Final Notes

This information illustrates the computation of the consideration for notional transactions, especially emphasizing the importance of understanding relief and the stipulations that may restrict its application. Accurate knowledge of these elements is essential for ensuring compliance and making informed decisions in transactions involving group companies.

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