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SDLT - Inter company transfer

Subsidiary to transfer Property to Holding Co.

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Hello,

We have created a holding company and created a group structure of Parent-Subsidary 100%. Subsidary land/property needs to be trasnffered (at zero compensation) over to the holding co. But we have just been told by the Lawyers that if there is a charge (of over 125K) on the property of Subsidary, which there is, we might still be liable for the stamp duty!

Can someone please confirm and suggest what can be done. The aim is for the holding co. (Parent) to hold all the Assets of the subsidary eventually.  

Replies (15)

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By williams lester accountants
25th Jan 2022 10:31

I would suggest speaking to your company accountant, they will have all the information to help you decide the best course of action.

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Replying to williams lester accountants:
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By AM28
25th Jan 2022 10:42

Hi,

Thank you responding. I am the co accountant. And I do not have this information, the lawyers suggest as mentioned in the question and I am just confirming with my peers here.

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Replying to AM28:
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By David Ex
25th Jan 2022 11:50

AM28 wrote:

I am the co accountant. And I do not have this information,

Corporate restructuring is a specialist area and the owners of the business you work for are foolish in the extreme if they have not taken professional advice. Expecting you to manage using what you can find on anonymous Internet forums is absolutely crazy.

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Replying to David Ex:
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By AM28
25th Jan 2022 12:28

That is not the case! We have lawyers and accountants taking care of it.

Only that the Lawyer has comeback saying the charge will initiate the SDLT.
Although this a cross charge on both the parent and subsidiary.

So this post is just to see if there is anyone who backs the lawyers claim or are we dealing with a rather inexperienced lawyer?

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Replying to AM28:
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By David Ex
25th Jan 2022 12:40

AM28 wrote:

That is not the case! We have lawyers and accountants taking care of it.

So what did your accountants say when you asked them? Who has been appointed to advise on the tax issues arising from the reorganisation? The accountants or the solicitors? You’re asking accountants here so might it not be sensible to ask your own accountants?

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Replying to David Ex:
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By AM28
25th Jan 2022 12:49

I understand what you're saying. I have done all the sense checks, had I received all the details and answers from the accountants and lawyers I would not have bothered to get people's thoughts on this forum.

You can simply give me your thought on the actual query which again is:

"Is a company liable to pay SDLT if a fully owned subsidiary is transferring land/property at zero consideration, given there is a charge on the property of subsidiary."

I know restructuring is a specialist area, I know our advisors (accountants & Lawyers) are to answer this. But that is not what I am requesting other users here. The request is mentioned above.

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By David Ex
25th Jan 2022 10:46

Definitely worth speaking to the accountant who advised on the restructure.

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paddle steamer
By DJKL
25th Jan 2022 10:47

Think about whether you can discharge the security over the property prior to its transfer.

This really ought to have been considered before any steps were taken, for one thing how was the proposed change of ownership explained to the lender, how was existing loan discharge envisaged to happen to facilitate the transfer?

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By Justin Bryant
25th Jan 2022 10:51

Surely SDLT group relief can be claimed here (s54 FA 2003 only disapplies s53 MV rule, so any actual chargeable consideration re debt assumed has to be group relieved).

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Replying to Justin Bryant:
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By Jason Croke
25th Jan 2022 12:05

Justin Bryant wrote:

Surely SDLT group relief can be claimed here (s54 FA 2003 only disapplies s53 MV rule, so any actual chargeable consideration re debt assumed has to be group relieved).


+1
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Replying to Justin Bryant:
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By Dib
25th Jan 2022 12:36

+1

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By Hugo Fair
25th Jan 2022 14:22

And the moral is ...

if you want to check something that you "have just been told by the Lawyers" - then ask another lawyer (not an accountant).

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Replying to Hugo Fair:
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By AM28
25th Jan 2022 14:50

If you do not have anything valuable to add then pass on. Don't waste anyone's time please.

People (accountants) with knowledge have already shared their valuable advice.

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Replying to AM28:
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By Hugo Fair
25th Jan 2022 16:05

And how is that gratuitously unhelpful post not wasting everyone's time (apart presumably from your perspective in the centre of your own little universe)?

Oh, and the "valuable advice" (other than suggesting, politely, that you go away and appoint a professional to sort out a problem that should not have arisen in the first place) only really started when a lawyer (rather than accountant) entered the fray.

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Replying to AM28:
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By Leywood
25th Jan 2022 16:50

Hugo 5410 thanks.

You -none.

Take your own advice.

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