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Ask an expert: SDLT, early possession and substantial performance

Q: My client is purchasing a property and is due to exchange soon with completion planned for the end of the month but he has the option of taking possession of the building earlier and has been told by a friend that this might trigger a charge to SDLT.

A: All legislative references in this reply relate to FA 2003 unless otherwise stated.

Section 119 gives the meaning of effective date to every chargeable transaction. This date is important because this date triggers the tax liability and it is within 14 days from this date that the purchaser must file an SDLT return and pay the tax. Under normal circumstances the effective date is the legal completion date (s 119(1)(a)) but there are some exceptions to this rule as prescribed by regulations (s 119(1)(b)) where the contract has or will be substantial...

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