SDLT. Linked transactions or not ?

by **georgespencer2** on Sat Apr 17, 2010 12:08 pm

Can anyone please advise how to legally avoid paying unnecessary SDLT in the following scenario ?

Same seller has for sale 2 separate properties currently for sale, (a) 30 acres of farm land @ £250k & (b) House plus 2.5 acres paddock @ £850k. Both properties held on separate titles but same name. The are next to each other, separated by a fence.
I can buy either one or the other, or both. No conditions on either, to buy the other.

My solicitor advises that the properties are linked as it is the same seller selling to the same buyer at the same time, and as such I must pay 4% of the total £1.1m. to avoid paying £7,500 more than I need to,I feel that there must be a legal solution. Perhaps I could buy the house and my grand children could buy the 30 acres next door ? ( Instructing different solicitors for each purchase if necessary.
Can anybody advise ? Thank you.

by **AvocadoK** on Sat Apr 17, 2010 1:37 pm

I agree with your solicitor.
Sadly, the purchase of land will be treated as a linked transaction if you or anyone connected with you acquires it as part of an arrangement or a series of transaction. Your children, grandchildren and wife are all treated as being connected with you. So if a connected person did acquire the land, it would not be a legal way of reducing SDLT.

There are SDLT avoidance schemes around - just google "SDLT avoidance scheme" and you will find them very quickly.

AK

by **section 44** on Mon Apr 19, 2010 11:46 am

Transactions are not linked merely because of the same buyer and seller (or persons connected with them). The transactions also need to form part of a "single scheme, arrangement or series of transactions" if they are to be linked.

For the transactions not to be linked you would need to complete one before detailed negotiations have commenced on the other and you would need to be confident that the completion of the first transaction did not in any way influence the terms of sale in respect of the second transaction (hence the second transaction was on such terms as would have been agreed with any independent buyer). Evidentially a tall order unless there is a decent period of time between the two transactions.

by **AvocadoK** on Mon Apr 19, 2010 8:54 pm

Thank you for that. I agree with the reference to "single scheme....series of transactions." Read literally, a series of transactions could be one transaction after another, with no contractual nexus between them. I wondered how you arrive at the conclusion that they would not be linked if completion of the first transaction did not influence the terms of the second. Grateful for your comments
Regards
AK

by **section 44** on Tue Apr 20, 2010 10:11 am

A literal interpretation of "series" would make no sense. For example, a man buys a new home from (say) Barratts and three years later his sister buys a new home from Barratts. On a literal interpretation they would be linked transactions.

From the SDLT manual, and comments with HMRC Stamp Taxes, it is clear that there has to be more than a literal series and that there has to be a link between negotiations/pricing. It’s a self-assessed tax so the onus is on the second purchaser to be satisfied that the terms of the second acquisition was not in anyway influenced by the first transaction.