Company A would like to enter into an option agreement with Company B, which is a connected company, to purchase a parcel of land for today's market value (confirmed by a surveyors valuation) in a 3 year period.
Company A has acquired the land in the hopes it finds a buyer who wants to develop the land in the option period, which offers more than the exercise price within the option agreement for said parcel of land (the land is purely surplus to requirements of B and isn't being actively marketed).
However, at the end of the period it has not found a buyer but wishes to exercise the option as the market value has increased. Would the consideration for SDLT purposes be market value at grant (i.e. the consideration paid)? Or would s.53 apply such that the MV at exercise is deemed consideration?
I am comfortable with the CGT implications of such a transaction.
Replies (3)
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I think the answer here is that such an option itself has a market value on grant and is a linked transaction, so together with the exercise price you get the higher overall market value.
Alternatively, if it otherwise works to avoid s53 it would likely be defeated by s75A.