VAT Director Rayner Essex
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Stamp duty land tax
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SDLT: Careless drafting cost £118,750

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The exemption from 15% SDLT was broken as a shareholder of the purchasing company had the right to occupy the property for up to five days while it was not otherwise let.

22nd Jan 2021
VAT Director Rayner Essex
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This case (TC07881) hinged on whether the 15% SDLT surcharge is applicable due to personal use of the property. It highlights the need to be careful when drafting legal documents.

SDLT exemption

When a corporate entity purchases a dwelling for over £500,000 a 15% SDLT surcharge applies to the whole value unless exemptions apply. This charge is designed to deter dwellings being held within a corporate wrapper.

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Replies (2)

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By Justin Bryant
22nd Jan 2021 14:11

I suspect that the share certificate and members’ register may have been back-dated (to the allotment date) per my comments in the link below (albeit re share transfers) and possibly that argument could have helped if the taxpayer had confirmed that that happened.

https://www.accountingweb.co.uk/any-answers/can-you-backdate-a-companys-...

Notwithstanding s 558 CA 2006, if the physical share allotment entries in the members’ register are made the day after the allotment date then arguably it is not allowed to back-date the members’ register to the prior allotment date and it must still be dated with its actual amendment date. Assuming you can’t back-date the members’ register for share transfers, I can’t see why there should be a back-dating exception for share allotments and s 558 says nothing about the date the members’ register should be dated if it’s amended subsequent to the share allotment date.

Apart from that, the taxpayer was rather let down by her lawyers here as stated above and her counsel did a pretty good damage limitation job re SLP etc.

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Replying to Justin Bryant:
Jason Croke
By Jason Croke
28th Jan 2021 16:34

Appreciate the article doesn't delve too deeply into the share holding aspects of the case, I am somewhat limited to numbers of words so focused on the main theme of having a personal use clause on a property that cannot be used for personal use.

The share issue, you are right, there is certainly room for discussion there and the Counsel had little to work with but put up a spirited fight.

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