- This topic has 5 replies, 1 voice, and was last updated 14th April 2018 at 4:25 pm by
.
-
Posts
-
If you wish to achieve protection from a discovery assessment you will need to make a disclosure. HMRC Statement of Practice 1/06 sets out the extent of the disclosure required. SDLT Technical News issue 4, March 2007 confirms that SP1/06 applies to SDLT. By making a disclosure you will almost certainly find that the land transaction is put under enquiry.
In a case where S Ltd contracts and completes a purchase for, say, ?10million and immediately declares a dividend in specie of the property to its parent company P Ltd for no consideration is the first transaction a ‘notifiable transaction’?
I would be grateful if someone could confirm the correct practice in relation to the filing of returns to HMRC in this instance.
Kind Regards.
My view is that if completion occurs at the same time and there has been no previous substantial performance then section 45(3)(a) regards the shareholder as the purchaser and the completion of the original purchase is disregarded. It follows from this that the first transaction is not notifiable. Of course section 75A might apply to the overall transaction to tax it on the full consideration paid by the original purchaser although this does not necessarily follow.
Thank you, that was my initial thought.
Presumably it could be argued that no “scheme transaction” exists given the lack of mens rea (to use criminal law parlance) of the vendor? Although, could HMRC not just argue that the scheme transaction is the declaring of the dividend immediately upon completion?
The argument for the taxpayer is that the completion of original purchase is disregarded for SDLT by section 45(3) and therefore is not a ‘scheme transaction’ and so cannot be aggregated with the dividend in specie to form a notional transaction under section 75A.
