Home › Forums › Patrick Cannon › Can a property be distributed in by a company without paying SDLT?
- This topic has 6 replies, 1 voice, and was last updated 14th April 2018 at 4:58 pm by Patrick.
I am aware of the rafts of anti-avoidance legislation regarding investment partnerships and groups of companies on the distribution of land in-specie. Do these provisions apply to more traditional distributions of land and buildings from say small family companies to its individual shareholders either while still trading or during winding up? Many thanks – TimPatrick CannonGuest
In principle the anti-avoidance rules apply to small family trading companies as to any other but it should normally be possible to distribute land in specie without an SDLT charge as long as you avoid any assumption of debt charged on the land – see section 54(4) and para 8 Sch 4 FA 2003.Tim FordeGuest
Thank you Patrick. So a very straightforward case where a company distributes land in specie, in the course of winding up or otherwise, where there is no debt involved at all or group arrangements should be free of SDLT as there is no consideration? It is a one sided transaction?Patrick CannonGuest
Yes. The transferee will not have to pay SDLT nor file a return and the land transfer can be sent direct to the Land Registry with a covering letter stating that there is no consideration.Tim FordeGuest
How about where a company distributes a property into its occupational pension scheme as a company pension contribution? Would the market value rules apply here, none of the exceptions in s54 would seem to apply to this transaction?. Thank you.Jimmy MacdonaldGuest
Can you please clarify for me – I’m getting conflicting answers on this. If Company A distributes a property owned by it into the SIPP as a pension scheme contribution, my understanding is that this would not attract SDLT as it is a transfer for no chargeable consideration.and as such it would be exempt under Section 3 Para 1 of the Finance Act 2003. Is this correct?PatrickGuest
This scenario raises some complex issues which is probably why you are getting conflicting answers! I wouldn’t venture a simple answer given that each situation will depend on its facts although one potentially complicating factor is that a contribution by the employing company may not be a gift given that the company would only be willing to do so in return for the services of the employee to the company.