Guide to Tax Recovery Process and Rights for Group Relief Withdrawal

Recovery of unpaid tax after group relief is withdrawn

If group relief on a land transaction is later withdrawn and the buyer does not pay the tax due, HMRC may be able to recover the unpaid tax from another person. To do this, HMRC must serve a formal notice that meets strict legal requirements. The notice is treated like an assessment, can cover interest as well as tax, and the person who pays can then seek repayment from the acquiring company.

• The buyer remains primarily liable when tax becomes due after group relief is withdrawn, but HMRC may pursue another person if the tax is unpaid.
• HMRC must serve a notice requiring payment within 30 days, stating the amount due, and serving it within 3 years from the date the tax was finally determined.
• The notice is not just an informal demand: it is treated as an assessment and also applies for recovery, interest, and appeal purposes.
• If the notice is late, defective, or does not clearly state the amount due, that may affect whether the tax can be enforced against the person served.
• A person who pays tax and interest under the notice has a legal right to recover that amount from the acquiring company.

Scroll down for the full analysis.

Group relief withdrawal: when unpaid tax can be recovered from someone other than the buyer

This page explains what happens if tax becomes payable after group relief is withdrawn, but the acquiring company does not pay it. The rule allows the tax authority to recover the unpaid amount from another person in certain cases. The source material is short, but its practical effect is important because it shifts the immediate payment risk beyond the original buyer.

What this rule is about

Group relief can reduce or remove tax on a land transaction within a corporate group. If that relief is later withdrawn, tax becomes payable. The basic position is that the acquiring company, as buyer, is liable for that tax.

The rule covered here deals with a different question: what if that tax remains unpaid? The legislation allows recovery from another person, provided the formal notice procedure is followed.

This is therefore a recovery mechanism. It does not change the underlying reason why the tax arose. Instead, it gives the tax authority another route to collect tax that should already have been paid.

What the official source says

The official material says that, to recover the unpaid tax from another person, a notice must be served on that person.

That notice must:

• require payment of the unpaid tax within 30 days of service of the notice
• be served within 3 years beginning with the date on which the tax was finally determined
• state the amount of tax to be paid by the person served with the notice

The notice is treated as if it were an assessment, and as if the tax were due from the person on whom it is served. It also has effect for recovery of the tax, any interest on the unpaid tax, and for appeal purposes.

The source also states that, once the person served with the notice has paid the tax and interest, that person is legally entitled to recover what they paid from the acquiring company.

What this means in practice

The practical point is that, after group relief is withdrawn, non-payment by the buyer does not necessarily leave the tax authority limited to pursuing that buyer alone. Another person may be required to pay instead, if the statutory conditions for recovery are met and a valid notice is served.

The notice matters because it is not just an informal demand. The source says it is treated like an assessment. That means it creates a formal basis for collection and also for any appeal.

There are three practical consequences.

• The person served cannot ignore the notice on the basis that they were not the buyer.
• The amount demanded must be identified in the notice itself.
• The tax authority must act within the 3-year time limit running from the date the tax was finally determined.

The source also protects the person who ends up paying under this mechanism. If they pay the tax and interest, they are entitled to recover that amount from the acquiring company. In other words, the law may shift the immediate payment obligation, but it preserves a right of reimbursement against the buyer.

How to analyse it

If this issue arises, the sensible questions are:

• Has group relief in fact been withdrawn, so that tax is now payable?
• Has the amount of tax been finally determined?
• Who is the person from whom recovery is being sought under the legislation?
• Was a notice actually served on that person?
• Did the notice require payment within 30 days?
• Was the notice served within 3 years from final determination of the tax?
• Does the notice clearly state the amount said to be payable?
• Is interest also being claimed, and if so, on what basis?
• If payment is made, what steps are available to recover that amount from the acquiring company?

This framework matters because the power to recover from another person depends on the statutory notice process. If the notice is defective or late, that may affect enforceability. The source does not set out every detail of who may be pursued, but it is clear that service of a compliant notice is central to the recovery mechanism.

Example

Illustration: a company acquires land and claims group relief. Later, the relief is withdrawn and tax becomes payable. The acquiring company does not pay. The tax authority then serves a notice on another person who falls within the relevant recovery provisions. The notice states the amount due, requires payment within 30 days, and is served within 3 years from the date the tax was finally determined. Under the source material, that notice is treated as an assessment against that person, and the tax and interest can be recovered from them. If that person pays, they can then recover the amount paid from the acquiring company.

Why this can be difficult in practice

The source material is clear on the mechanics of the notice, but shorter on the surrounding detail. In practice, difficulty may arise over the date on which the tax was “finally determined”, because that date controls the 3-year time limit for service. If there has been correspondence, a dispute, or an appeal process, identifying that date may not always be straightforward.

There may also be practical questions about whether the notice was properly served and whether it accurately states the amount recoverable. Because the notice is treated as an assessment and has effect for appeals, those procedural points can matter a great deal.

Another practical difficulty is commercial rather than technical. Although the payer has a legal right to recover the amount from the acquiring company, that right may be less valuable if the acquiring company is insolvent or difficult to pursue.

Key takeaways

• If tax becomes payable after withdrawal of group relief and remains unpaid, it may be recovered from another person through a formal notice.
• The notice must require payment within 30 days, state the amount due, and be served within 3 years from final determination of the tax.
• A person who pays under such a notice is entitled to recover that amount from the acquiring company.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Tax Recovery Process and Rights for Group Relief Withdrawal

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