HMRC SDLT: SDLTM23090 – Reliefs: Group, reconstruction or acquisition relief

Reliefs: Group, Reconstruction or Acquisition Relief

This section of the HMRC internal manual provides guidance on reliefs available during group, reconstruction, or acquisition scenarios. It outlines the principles and concepts associated with these tax reliefs.

• Group relief allows companies within a group to offset profits and losses.
• Reconstruction relief applies to company reorganisations without immediate tax charges.
• Acquisition relief offers tax benefits during company acquisitions.
• Eligibility criteria and conditions for each relief are detailed.

Title: SDLTM23090 – Reliefs: Group, Reconstruction or Acquisition Relief

This article explains the situations in which group relief can be withdrawn after a property transaction. It outlines specific circumstances that may lead to the withdrawal of relief, as well as cases where the relief remains unaffected. Understanding these scenarios is important for both buyers and sellers involved in transactions between group companies.

What is Group Relief?

Group relief is a tax relief that allows companies within the same group to transfer properties without paying Stamp Duty Land Tax (SDLT) under certain conditions. This relief is helpful in simplifying the movement of assets between companies that are affiliated or part of the same corporate group. However, there are instances where the relief may not apply if circumstances change after the transaction.

Withdrawal of Group Relief

The withdrawal of group relief can occur under specific events that take place within three years of the transaction. Below are the examples that illustrate various events leading to the withdrawal of this relief:

Withdrawal Events

• SDLTM23090A: If the purchaser stops being part of the same group as the vendor within three years after the transaction, the group relief will be withdrawn. It is crucial to monitor group membership closely following the transfer of property.
• SDLTM23090B: If the purchaser departs from the group within three years and transfers the property to another company within the same group, the relief is also withdrawn. This situation can arise when restructuring occurs within the group.
• SDLTM23090C: Similar to above, if the purchaser exits the group within three years and subsequently moves the property to another group company, the relief will be withdrawn once more. Any changes in group structure should be noted as they may affect the tax relief.

No Withdrawal Events

There are cases where relief will not be withdrawn. Understanding these scenarios can help mitigate unneeded tax liabilities:

• SDLTM23090D: If the purchaser leaves the group within three years but transfers the property to another company in the same group and the relief has not been withdrawn, the tax position remains unchanged. This means that the tax relief still applies despite the change in group membership.
• SDLTM23090E: In the event that the purchaser leaves the same group within three years but there is a change to the chargeable interest they possess, it will result in a partial withdrawal of relief. This means that the relief will still apply, but only to the extent that it was valid before the chargeable interest changed.

Further Exceptions to Withdrawal

There are also circumstances where relief remains intact, even if there are changes to group membership:

• SDLTM23090F: If the vendor leaves the group, the relief is not withdrawn. A change in the vendor’s group membership does not affect the relief that has already been granted during the property transaction.
• SDLTM23090G: Similar to the previous point, if the vendor exits the group after the transaction, this event does not trigger the withdrawal of relief. The focus here is on the purchaser’s status in relation to the vendor.

Important Considerations

When dealing with property transactions and group relief, it is useful to keep several key considerations in mind:

• Stay informed about the group membership status for both the purchaser and vendor throughout the three-year period after the transaction. Any changes can have ripple effects on the relief provided.
• Document any transfer of properties carefully, especially when moving assets between companies within the group. Proper documentation can ease the assessment of tax liabilities if any questions arise later.
• Be aware of any changes in chargeable interests. These can affect the validity of the relief even if the parties remain within the same group.

In summary, knowing when relief can be withdrawn or retained is essential for companies involved in property transactions within groups. By understanding the outlined events and exceptions, companies can better manage their tax liabilities and ensure compliance with relevant tax laws regarding SDLT.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM23090 – Reliefs: Group, reconstruction or acquisition relief

View all HMRC SDLT Guidance Pages Here