Reclaim stamp duty

[maths]

I am grateful to SDLT Geek for taking the time and trouble to post views expressed by HMRC information not, it would seem, currently available to the public at large.

HMRC's practice in this regard is something I have always found unacceptable. Views of HMRC of a general nature should be made available to all not just those who happen to attend a meeting irrespective of whether or not those attending represent a professional body or not (eg CIOT: ICAEW etc).

HMRC's view seems to be that in respect of the SDLT 3% charge, on death the deceased is treated as if he/she has disposed of property owned at the time of death (compare CGT treatment on death). So if A owns a residence and prior to its sale purchases another property which he then occupies as a residence the 3% is initially payable but should A die (presumably within the 3 year period) his PRs are able to reclaim the 3% as on death A is treated as if at that time he had sold his first residence.

Thus death is treated as giving rise to a "disposal" of the residence.

Presumably, if H and W own a residence (say 50/50) and they then jointly purchase a new residence (say 50/50) prior to sale of their original residence and say H dies prior to sale of the original residence then at the date of death the 3% is not reclaimable as although H's 50% share is treated as disposed, W's 50% (probably now 100% under H's will) has not been disposed? This would also apply of W's interest was say only 1% (if the 1% was valued at least £40,000).

[SDLT Geek]

I agree with the points maths makes. Hopefully by promptly reporting these views expressed by HMRC I am helping to mitigate the problem of HMRC not making their views public. I believe this website comes up high on search engines, so this is a good forum for spreading the word. I will have a think about how to "publish" the other points that came up in Friday's meeting.

Yes, maths correctly summarises the view expressed by HMRC at the meeting, as I understood it.

Maths' example of H and W jointly buying a new home together before selling their old one is very interesting. Disregard the loose talk elsewhere of spouses being "a unit". They are not. On a joint purchase one has to look at each joint owner as if they were buying alone. That is what the statute says.

So if H dies then the purchase of the new home "becomes" a replacement for the old home within the meaning of Sch4ZA para 3(7) for H.

If H and W do not count as married then that is the end of it, even if W only had a small share (but valued at £40,000 or more), then the surcharge is not reclaimable until W also makes a disposal.

But there is some special provision for spouses in para 3(7)(b). The disposal of a major interest that is needed for the purchase to "become" a replacement can be by "the purchaser or the purchaser's spouse or civil partner". Let us say that H and W were married before H died. Can W take advantage of the disposal caused by H's death to get her as well qualifying for a reclaim on the "becomes a replacement"?

The difficulty is that the disposal by H happens on his death, not before, so at the moment of the disposal they are no longer spouses. Tricky! No-one at the meeting thought to ask HMRC about that! I feel it would be a "concession" to say that W can use H's death to get her qualifying for a reclaim, but it is a bit of a moot point.