re: Not for profits SDLT

[saharwood]

Hello

Stamp Duty is not my specialism so could anyone advise on the acceptance of exempting the assignment of land/property when it is given by a statutory government body to a not-for-profit organisation (not a registered charity but articles state not-for-profit). HMRC guidance indicates where for a 'charitable purpose' body it can be exempted but there's virtually nil extra info after this (HMRC helpline useless as expected).

The transfer may be for nil, peppercorn or net book value (tbc).

My concern is a not-fot-profit could feasibly post profits should articles of association be altered in the future hence HMRC may block?

Many many thanks in advance

Scott.

[section 44]

In any event, if there is no chargeable consideration then the acquisition is exempt from SDLT.

[saharwood]

Could HMRC not imply there is a deemed value, i.e. apply the market value to the supply?

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm#5

Although similar to a gift this does not seem to fall into HMRC's guidance as a qualifying gift.

Please note there is substantial properties values here so I can't make any assumptions.

thanks

[section 44]

Could HMRC not imply there is a deemed value, i.e. apply the market value to the supply?

Not unless that is what the law provides. Based on what you have said, the law does not impose a market value charge.

[saharwood]

I quote (in relation to no monies passing):

"In certain circumstances SDLT is payable on the market value of a property - not the consideration given - when it's transferred to a company.

This applies in either of the following situation:
The person who transfers the property is 'connected' with the company. The definition of a connected person is quite broad and covers relatives and people who have some involvement with the company."

In short, can his clause of applying market value be applied between two companies as opposed to only between an individual moving land to a connected company?

Reagrds

[section 44]

In short, can his clause of applying market value be applied between two companies as opposed to only between an individual moving land to a connected company?

Yes (provided that the two companies are connected).

[saharwood]

Thanks Section 44.

No offence, but can anyone else provide a second opinion (as i seem to be informing you and i have limited knowledge to SDLT)?!

nil or peppercorn transfers to Not for profits must occur all the time - do these really become liable to market rate value SDLT? (notwithstanding they probably never hit the radar with any party or HMRC ~ but that's not the point).

Has anyone any experience to such transfers?

Regards

[section 44]

informing you

Informing me of what?

Ignorantly you appear to be referring to the provisions of section 53 of the Finance Act 2003, which are not in point (I assume that the transferee is not connected with the transferor).

[saharwood]

Section 44, please don't take my comment the wrong way, I'm just trying to get 100% clarity against what is obviously a vague area.

I only point out that your advice changed from:
a. no SDLT applies
b. the law does not impose against market value
c. yes SDLT applies to market value
...without any change of actual fact... hence my just trying to firm up an answer.

As far as section 53 (and yes i admit I'm 'ignorant' of SDLT as originally stated in my first post), I'm not sure who may be regarded as 'connected' (in the case of two companies). Whilst in my own case they are separate entities they may be regarded as 'connected' as the N4P involves staff transferring from one organisation to the other plus an ongoing funding arrangement. Is there any case law of further definition that can be examined for 'company to company' transfers?

Furthermore, section 54 seems to except where the purchaser is 'not in business'. I'm aware HMRC has varying views of 'in business' dependent on the tax. For example, a N4P in VAT can be regarded as 'in business'.

any further advice is welcomed

regards

[section 44]

My advice hasn't changed:

a. no SDLT applies

Based on what you have said, you have no SDLT liability.

b. the law does not impose against market value

Based on what you have said, no market value charge would be imposed here.

c. yes SDLT applies to market value

That's not what I said, rather I said (in response to your apparantly hypothetical question) that a deemed market value charge can be imposed where the parties are connected companies however, based on what you have said, that is not the case here because the transferee is not connected to the transferor.