A property developer client is buying some land, and will pay the relevant amount of Stamp Duty.
It has been suggested that he buys all the shares in the company that currently owns the land, and therefore will pay a much amaller amount of stamp duty.
I am not entirely happy about this. Any advice?
Alexander N Guberman
Replies (3)
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It Works
This works to save 3.5% stamp duty - the rate for share sales is 0.5% for any amount paid (this may all change in the budget of course). It's certainly not tax avoidance. But buying a company is legally more complicated than just buying a property so it's worth checking the extra legal & due diligence costs won't outweigh the saving. The buyer needs warranties and indemnities against any problems in the company because the buyer "inherits" these - the lawyers should deal with all of this. You need to check other things, eg that there are no s.179 problems, no clawback of stamp duty on leaving a group, no unwanted baggage owned by the company.
Non-event
Or not as the case may be. Seems like buying the company is OK for saving stamp duty until December.