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George Bull
Senior Tax Partner

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T: 020 3201 8000
F: 020 3201 8001

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Stimulating the property market

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Disclosure of tax avoidance schemes – SDLT

The specific Disclosure rules for notifying SDLT planning arrangements did not extend to identifying actual transactions that have taken advantage of the arrangements notified. Nor did the scheme currently enable indirect land transactions to be notified (for example, the sale of a company owning land rather than the land itself). While there is no proposal that the scheme will be extended to cover indirect land transactions yet, there is to be a need to obtain a scheme registration number and advise those implementing them to ensure that it is reported.

Linked transactions – SDLT

Concern has frequently been expressed that the anti-avoidance legislation is often poorly targeted and acts as an obstacle to normal commercial transactions. One such area is that of linked transactions. Where a number of properties are sold as a package, the legislation requires the total consideration to be used to determine the rate of tax. Hence, if a block of 25 flats is sold for £2.5 million (say £100,000 each) the SDLT payable is £100,000 (4% of £2.5 million) whereas the sale of each individually would be not chargeable at all as each is within the nil rate band. This provision increases the cost of a residential property investor acquiring a number of properties from a single vendor and will have some adverse impact on the development of residential property letting market. It is, amongst a number of measures being considered for change in order to encourage this market sector.

Recovery of overpaid tax

Changes are proposed to the Stamp Duty Land Tax and Petroleum Revenue Tax error or mistake legislation. Draft legislation has been published. The proposed changes are modelled on the income tax, capital gains tax and corporation tax legislation and they will prevent alternative claims for repayment i.e. common law claims and will have a four year time limit. The new rules will come into effect after a transitional period during which claims will be possible under the current rules.