The property industry has been having a tough time lately extracting property from companies and unit trusts without SDLT costs. HMRC had considered it tax avoidance to buy a company and then transfer property out to a group company so no group relief from SDLT. Thankfully HMRC has since relaxed its view on that. We now have guidance (published 20 December last year) which addresses how the FA 2003 s 75A anti-avoidance rules might apply to financing around distributions of property to shareholders.
The December note reaffirms that where a company holding real property has any borrowings and distributes the property to its 100% shareholder HMRC will accept that SDLT is not payable if the borrowing comes solely from the shareholder and the company is being liquidated. This is helpful and appears to be because HMRC sees the property as already belonging to the sole shareholder (and...
