Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

HMRC loses SDLT sub-sale tribunal

by
23rd Nov 2012
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC has lost an appeal over stamp-duty land tax (SDLT) on the sale of the old Dickens and Jones department store in Regent Street, central London.

When the store was sold in 2006 the sub-sale to a corporation partnership meant that £2.6m of SDLT that might have been payable on the transaction was not, according to an earlier decision by the first-tier tribunal.

The upper tier tribunal (The Commissioners for HMRC and DV3 RS Limited Partnership, UKUT 399, TCC) agreed with the first-tier tribunal.

Under the transfer of interest rules in partnership the consideration of transfer of interest from a partner to a partnership is nil if they are connected.

In the upper tribunal, HMRC tried various arguments including that partnership rules should not apply to the property sale due to the way the deal was organised.

However, the upper tribunal rejected HMRC’s appeal.

Justice Henderson said: “The sub-sale by the company to the partnership forms part of the real state of affairs, and I can find nothing in the statutory hypothesis which requires it to be displaced. The purpose of the disregard of the completion of the original contract has nothing to do with the real world state of affairs from which the hypothesis of the secondary contract is constructed, but is rather to ensure that there is only one charge to SDLT if the original contract and the secondary contract are completed at the same time. I am unable to see any grounds for giving it a wider or more general effect, and still less for using it to undermine or modify the factual basis of the secondary contract.”

In her 21 November AccountingWEB podcast Anne Fairpo said that the judge was effectively saying that sub-sale rules create a hypothetical contract and therefore doesn’t affect reality.

Tags:

Replies (1)

Please login or register to join the discussion.

avatar
By Jaymusgrave
03rd Dec 2012 15:19

HMRC loses SDLT sub-sale tribunal

Nice waste of money HMRC.

Thanks (0)