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A is director and 100% share holder of A.Ltd whose only asset is land valued at ?800,000. A.Ltd owes to A ?800,000.
A wishes to transfer property out of A Ltd to himself in consideration of the release of the debt and then gift it to simultaneously to A’s pension fund.
Would a subcontract arrangement under S45 avoid all sdlt?
Probably. HMRC may try and argue that the satisfaction of the debt is picked up as chargeable consideration under section 45(3)(b)(i) FA 2003 as given by A as a person connected with the pension fund but that would be wrong as such an interpretation would always lead to double counting where the first buyer and the sub-purchaser were connected even where the first buyer pays SDLT. Section 75A may be an issue but you could argue that the first transfer is not “involved in connection with” the second transfer and is merely a subsequent step carried out between A and his pension fund without the involvement or co-operation of A Limited although it would be helpful to have two transfers rather than one.
