Recovery of Unpaid Group Relief Tax from Related Companies and Directors

LTT group relief: who may have to pay if relief is later withdrawn

If Land Transaction Tax group relief is withdrawn after a property transfer, the acquiring company is still the first company liable for the tax. But if it does not pay within six months, the unpaid amount may be recovered from certain parent group companies or certain controlling directors, provided they fall within the statutory rules and have been served with a notice.

• The rule only applies after group relief has been withdrawn and the LTT due has been established.
• The acquiring company remains primarily liable, but HMRC’s Welsh counterpart may pursue others if the tax is still unpaid six months after it became due.
• Possible targets include companies that were in the same group and above the acquiring company in a 75% group structure during the relevant period.
• Possible targets can also include controlling directors of the acquiring company or of a company that controlled it, using the statutory tax definition of control.
• The relevant period runs from the effective date of the original transaction to the change of control that triggered withdrawal of the relief.
• Recovery is not automatic and requires a formal notice to be served on the person or company from whom payment is sought.

Scroll down for the full analysis.

LTT group relief: who can be made to pay if relief is later withdrawn

This page explains who can be pursued for Land Transaction Tax if group relief was originally claimed, that relief is later withdrawn, and the acquiring company does not pay the tax due. The rule matters because liability does not necessarily stop with the company that bought the property. In some cases, other group companies and certain directors can be required to pay the unpaid amount.

What this rule is about

Group relief can remove or reduce LTT on certain transfers within a corporate group. But if a later event causes that relief to be withdrawn, tax becomes payable.

The starting point is simple: the acquiring company is responsible for that tax. This provision deals with what happens if that company does not pay within a set period. It creates a recovery mechanism allowing the unpaid tax to be collected from other specified persons.

This is therefore a secondary recovery rule. It does not change who is primarily liable when the withdrawal happens. Instead, it gives the tax authority another route to collect the unpaid amount if the acquiring company fails to pay on time.

What the official source says

Once the amount of LTT due because of the withdrawal of group relief has been established, liability to pay rests with the acquiring company.

If all or part of that tax remains unpaid for six months after it became payable, the unpaid amount may be recovered from other persons.

The official material identifies two categories of person from whom recovery may be made:

• a company which, at any relevant time, was in the same group as the acquiring company and was above it in the group structure; and
• any person who, at any relevant time, was a controlling director of the acquiring company or of a company that controlled the acquiring company.

For these purposes, the relevant time runs from the effective date of the original transaction to the date of the change of control that triggered the withdrawal charge.

A company is above another in the group structure if the lower company, or another company above that lower company, is a 75% subsidiary of the higher company.

The source also adopts statutory definitions for director and controlling director. A controlling director is a director who has control of the company under the corporation tax control rules in sections 450 and 451 of the Corporation Tax Act 2010.

Recovery from one of these other persons requires a notice to be served on that person.

What this means in practice

In practice, this rule is aimed at situations where property was transferred within a group, relief was claimed, and a later change of control causes that relief to be clawed back. If the buyer company does not pay the resulting LTT within six months, the tax authority may look beyond that company.

This matters particularly where the acquiring company has few assets, has been sold, or is otherwise unlikely to meet the tax debt.

The rule does not say that every group company is exposed. The potential targets are limited:

• companies above the acquiring company in the group chain, provided they were in that position at some point during the relevant period; and
• individuals who were controlling directors during that same period, either of the acquiring company itself or of a company controlling it.

The six-month period is important. Recovery from these other persons only becomes possible if the tax, or part of it, has not been paid within six months from when it became payable.

The notice requirement is also important. Recovery is not automatic. A formal notice must be served on the person from whom recovery is sought.

How to analyse it

To work out whether this rule may apply, it helps to ask the questions in this order.

• Was group relief originally claimed on the land transaction?
• Has a later event caused that relief to be withdrawn, so that LTT became payable?
• Has the amount of tax due been determined?
• Has the acquiring company failed to pay all or part of that tax within six months of the due date?
• Who was in the same group and above the acquiring company between the effective date of the transaction and the change of control?
• Who was a controlling director during that same period, either of the acquiring company or of a company controlling it?
• Has a notice been served on the person from whom recovery is sought?

When looking at companies in the group, the key issue is not just whether they were connected in a broad commercial sense. The question is whether they were in the same group and above the acquiring company in the 75% subsidiary chain described by the rule.

When looking at directors, the key issue is not simply whether someone sat on the board. The rule is narrower. It refers to a director who had control under the statutory control tests. That can be more technical than ordinary company law concepts of influence or seniority.

Example

Illustration: Company B buys land from another group company and claims group relief. At the time, Company A owns 75% of Company B, so A is above B in the group structure. Two years later, a change of control occurs which causes the group relief to be withdrawn. LTT becomes payable by Company B.

If Company B does not pay the tax within six months after it became payable, the unpaid amount may be recoverable from Company A, assuming the other conditions are met. If, during the relevant period, one of B’s directors also had statutory control of B, that person may also fall within the recovery rule. In either case, recovery requires a notice to be served.

Why this can be difficult in practice

The difficult parts are usually factual and structural rather than conceptual.

First, the relevant period must be identified correctly. The rule looks at the period from the effective date of the original transaction to the date of the change of control that triggered the charge. In groups that have been reorganised several times, working out who was above the acquiring company at any point in that period may require careful tracing of ownership.

Second, the meaning of control for a controlling director comes from corporation tax legislation, not from ordinary language. A person may be an influential director without meeting the statutory control test, and conversely a person with the right shareholdings or voting power may do so even if their day-to-day role seems limited.

Third, the source says recovery is possible from specified persons once the tax has remained unpaid for six months, but the practical use of that power depends on proper service of a notice and on identifying the right target within the statutory categories.

Finally, this rule concerns recovery of unpaid tax after withdrawal of relief. It should not be confused with the earlier question of whether group relief was available in the first place, or with the separate question of whether and when a later change of control triggers withdrawal.

Key takeaways

• The acquiring company remains primarily liable for LTT when group relief is withdrawn.
• If that tax is still unpaid after six months, recovery may extend to certain parent-group companies and certain controlling directors.
• Recovery is not automatic: the person targeted must fall within the statutory categories and must be served with a notice.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Recovery of Unpaid Group Relief Tax from Related Companies and Directors

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