Reservation agreements were not options

In each of these appeals which were designated lead appeals the taxpayers entered a reservation agreement with the vendor expressing a wish to buy a specified apartment in a new-build residential property development for a specified price. They had to pay a reservation fee which was 0.2% to 0.3% of the purchase price. The reservation period was for a specified number of days after which it would be extended automatically until ended by the vendor.

The taxpayers subsequently acquired a 999-year lease of the apartments and filed stamp duty land tax returns on the basis the transactions were subject to the residential rate. Later each taxpayers’ agent amended the return to show a mixed rate applied. They said the agreements were options or pre-emption rights within the meaning of FA 2003 s 46(1) and were separate land transactions. Further the option and...