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Where Taxpayers and Advisers Meet

Linked transactions & 3% additional rate

AGoodman
Posts: 810
Joined: Fri May 16, 2014 3:47 pm

Linked transactions & 3% additional rate

Postby AGoodman » Mon Aug 12, 2019 11:33 am

Help!

Four siblings (A/B/C/D) jointly own a residential property circa £800k as beneficial tenants in common. (A) is selling out his beneficial interest to the other three. Each of the three pays £67k.

(B) has another property. If B/C/D buy in a single transaction, all three are subject to the additional 3% as joint purchasers (Sch 4ZA para 2).

If B/C/D stagger their purchases - each buying 1/12th over successive days/weeks, it may not be caught by this. Only equitable interests are changing hands, not legal title, so it is easy to split into three separate transactions.

I fear/suspect all three may be subject to the 3% anyway because either:

(a) the transactions form a series of transactions (in a non-technical sense) so should be treated as a single transaction with joint purchasers;
(b) they are linked transactions in the technical sense (they are) although I cannot find any provision that means the purchasers therefore share the "tainting" for Sch 4ZA purposes;
(c) some other provision such as s.75A, Ramsey or some other legislation applies; or
(d) general paranoia that the legislation should allow this.

I can't find anything definitive which leads me to the possibility that my paranoia is wrong and three separate transactions would be fine. They would still be linked transactions so the sums could be tricky with B paying higher SDLT and C/D paying less but I think there is a solution for this.

Anybody want to tell me this works (or doesn't)?

Incredible that SDLT is so hard for what is really a fairly straightforward transaction.

SDLT Geek
Posts: 171
Joined: Sun Apr 30, 2017 5:45 pm

Re: Linked transactions & 3% additional rate

Postby SDLT Geek » Mon Aug 12, 2019 3:14 pm

You are right to think that the transaction might be viewed as a single transaction for SDLT purposes, even with the “breaking down”.

If it is a number of linked transactions then yes, one might be at higher rates, the others at standard. The maths is a little complicated.

But is the big issue here the amount of chargeable consideration? The cash payments are low compared to the value. Is there debt involved?

AGoodman
Posts: 810
Joined: Fri May 16, 2014 3:47 pm

Re: Linked transactions & 3% additional rate

Postby AGoodman » Mon Aug 12, 2019 4:36 pm

Thanks. The consideration isn't an issue as A is selling one quarter of an £800k property (so value £200k) and will be paid market value (£67k * 3).

Do you think the "single transaction" risk is what I would call a "touchy feely" issue or a Furniss v Dawson type - i.e. you end up in the same position as a single transaction, it is just that each purchaser gets there independently rather than in a single document.


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