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SDLT Sub Sale Relief

Date: 14/08/13

SDLT Sub Sale Relief

It’s been brought to our attention that a technical glitch in the new SDLT sub-sale rules (specifically those relating to ‘pre-completion transactions’) could have potentially significant commercial implications. It was apparently raised during the consultation period but not dealt with by HMRC.

Paragraph 16(1)(c) of Schedule 39 FA2013 (the Schedule which introduces the new schedule 2A into FA2003) requires that in order for the intermediate purchaser to get relief, there has to be completion or substantial performance of the original contract.  If the original contract is over a large chunk of land which is to be drawn down and sold on by a developer (intermediate purchaser) in tranches, then each time there is completion of a tranche, there will not be completion or substantial performance of the original contract (only part of it). 

Sub-sale relief will only be available for the acquisition of the tranche whose sub-sale which triggers substantial performance or completion of the original contract. The rest of the acquisition SDLT will become payable at that point – but no further sub-sale relief will be available (as earlier and later sub-sales won’t take place at the same time as and in connection with the completion or substantial performance of the original contract).

There are concerns that the lack of availability of SDLT sub-sale relief could jeopardise existing development projects costed on the basis that sub-sale relief would apply.

A number of people have raised this issue with HMRC over the past weeks and officials seem to recognise that it deserves further consideration. However, we are not sure of the extent to which the problem has been recognised by developers more widely, and would very much appreciate your views on the scale of the problem that the above could cause for you. Our view at the moment is that the HBF should add its voice to those calling for a change in the rules to ensure that SDLT relief is available for phased/tranched sub-sales, but would like to hear your views.

Can you direct any comments to