HMRC SDLT: SDLTM23013 – Reliefs: Group Tax Bulletin article: Enquiries involving group relief claims

Principles and Concepts of Group Relief Claims

This section of the HMRC internal manual provides guidance on handling enquiries related to group relief claims. It outlines the principles and concepts involved in group tax relief, ensuring compliance with regulations and efficient processing of claims.

  • Explains the framework for group relief claims.
  • Details the procedures for conducting enquiries.
  • Emphasises compliance with tax regulations.
  • Offers insights into efficient claim processing.

HMRC Guidance on Enquiries into Land Transaction Returns with Group Relief Claims

This guidance explains the process HM Revenue & Customs (HMRC) follows when they decide to investigate a land transaction return that includes a group relief claim. The rules governing these enquiries are set out in paragraph 12 of Schedule 10 of the Finance Act 2003.

Starting an Enquiry

  • HMRC can start an enquiry within 9 months of the land transaction return being filed.
  • The enquiry is not limited only to the group relief claim; it can examine all elements of the land transaction return.

Impact on Registration of Title

When HMRC decides to open an enquiry, this occurs after they have issued the Revenue certificate, known as form SDLT5. Importantly, this will not slow down the process of registering the title to the property.

However, receiving the Revenue certificate does not mean that HMRC accepts the validity of the group relief claim. It simply indicates that HMRC is not currently investigating the return.

Scope of Enquiries

During an enquiry, HMRC will look into various aspects of the transaction. This includes:

  • Reviewing the group relief claim.
  • Requesting necessary documents, such as:
    • Instruments of transfer.
    • Any associated documentation related to the transaction.
  • Seeking additional information to clarify the claim.

Evidence Requirements

HMRC may require evidence to confirm that conditions outlined in paragraphs 1 and 2 of Schedule 7 of the Finance Act 2003 are satisfied. This evidence is crucial for justifying the group relief claim. If the evidence provided does not support the claim, HMRC will amend the self-assessment return to remove the group relief.

Understanding Group Relief

To better understand group relief, let’s break down the specific conditions set out in Schedule 7:

Paragraph 1 of Schedule 7

This paragraph states that exemption from Stamp Duty Land Tax (SDLT) applies where, at the effective date of the transaction, the companies involved are part of the same group. The exemption also covers the granting of leases between companies within the same group.

Example of Group Relief

Consider a scenario in which two companies, Company A and Company B, both belong to the same group. If Company A sells a property to Company B, they may qualify for group relief, meaning they won’t have to pay Stamp Duty Land Tax as long as they continue to meet the group conditions.

Requirements for Group Relief

To qualify for this exemption, the following needs to occur:

  • The companies must demonstrate they are members of the same group at the time of the transaction.
  • Any relevant documents should clearly show the relationship between the companies.

Key Points to Consider in an Enquiry

As part of the enquiry process, consider the following:

  • Be prepared to submit comprehensive documentation to support the group relief claim.
  • Ensure all companies involved are accurately documented as members of the group.
  • Anticipate potential questions from HMRC regarding how the transaction meets the criteria outlined in the pertinent regulations.

Outcomes of an Enquiry

The outcome of an enquiry can lead to various scenarios:

  • If HMRC finds that the group relief claim meets the necessary conditions, it will be accepted, and no SDLT will be collected.
  • If the evidence does not support the claim, HMRC will amend the original return, and SDLT will be imposed on the transaction.

Communicating with HMRC

During an enquiry, clear communication with HMRC is essential. If you receive correspondence from them, respond promptly and provide any requested documentation. Keeping records organized will facilitate this process.

Important Legal References

For further details on the rules governing these transactions, refer to the following:

Final Thoughts on Group Relief Enquiries

Understanding the process for HMRC enquiries regarding group relief claims can help ensure smooth transactions. Gathering the right documents and understanding your obligations under the tax law is critical.

For further assistance or clarification on specific scenarios, speaking with a tax professional or legal advisor knowledgeable in SDLT can provide additional guidance.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM23013 – Reliefs: Group Tax Bulletin article: Enquiries involving group relief claims

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Written by Land Tax Expert Nick Garner.
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