Generous relief

Generous relief

PAUL DAVIS takes a practical look at FA 2003, s 45 and 'other transactions'.

THE STAMP DUTY land tax régime does, in some cases, provide more generous relief than the old stamp duty régime for property transactions. The following case study illustrates the point.

In desperation, Harassed Conveyancer telephoned his Stamp Duty Adviser. 'I've got a subsale deal for Bloggs Builders but the land owner's solicitors have put in a condition that the intermediate purchaser must complete. Joe Bloggs has it in mind that he will pay only one lot of stamp duty, but now we will have a double charge and Joe, a difficult client at the best of times, will just expect me to sort it. Is there any way of avoiding this?'

'Let me be sure that I understand this,' said the Stamp Duty Adviser, reaching for a clean sheet of paper.

The position is explained that Bloggs Builders is trying to assemble a site for redevelopment. It has most of the land that it wants under option but a land agent, Mr Ducker, got wind of what was going on and has a contract with a Mrs Smith to buy her property for £600,000. There are conditions in that contract that Mr Ducker has to complete himself and cannot assign the contract or direct a transfer to a third party. Bloggs Builders desperately needs the Smith land to complete its land assembly for re-development and has agreed to pay Ducker £1 million for the land and to indemnify Ducker for his costs including any stamp duty land tax.

Indemnity problem

'So as you can see, Joe Bloggs is going to have to indemnify Ducker for £24,000 [£600,000 @ 4%] of duty', says the Harassed Conveyancer. 'I know that completion by the intermediate purchaser is fatal to subsale relief, so do you have a solution?'

'Well', said the Stamp Duty Adviser. 'Although under the old stamp duty régime completion by the intermediate purchaser would have been fatal to a subsale the new SDLT provisions are not the same as the old ones. One thinks that FA 2003, s 45 is primarily for subsales and assignments but it extends to "other transactions" and I think that we can structure your deal to be one of those.'

S 45 says:

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