SDLTM31330 | RIFS: SDLT entry charge when an unauthorised contractual scheme enters the RIF Regime

Regulation 28 is an anti-avoidance provision, needed to address concerns about the ‘enveloping’ of property assets within a RIF (enveloping refers to holding property through an entity) without a charge to SDLT applying.

Land transaction when an unauthorised contractual scheme becomes a RIF

Regulation 28 places an SDLT entry charge on the market value of property held when an unauthorised contractual scheme (UCS) enters the RIF regime.

The land transaction is the acquisition of the chargeable interests, with the effective date of transaction being the date specified in the entry notice.

The purchaser is the RIF, and the vendor the participants in the scheme.

The chargeable consideration will be the market value of the chargeable interests.

Regulation 28(6) and (7) provide further rules concerning interests in property investment partnerships.

RIFs that have previously left the RIF regime and then later re-entered

If a scheme exits the RIF regime but then subsequently re-enters, an SDLT charge based on the market value of the chargeable property held by the scheme immediately prior to re-entry would apply if the scheme has acquired property or there has been a change in ownership during the period the scheme is outside the RIF regime.