SDLTM50410 | Alternative finance arrangements: Further return where relief withdrawn

Where relief was claimed in respect of alternative property finance arrangements, and that relief is later withdrawn (to any extent) under:

• Paras 6D, 6F, 6G, 6H or 6I Sch4A FA03 -The higher rate for certain transactions - See SDLTM09700

• Part 3 Sch6C FA03 - Special tax sites – See SDLTM20340

a further return must be made within 30 days of the disqualifying event.

For each type of withdrawal, the 'disqualifying event' is defined at s81ZA(3) FA 2003.

Further Return Requirements

All further returns must be made in the form of a letter to HMRC at this address.

The further return must include the UTRN of the original return and a self-assessment of the tax now due. Full payment of the SDLT due must be paid by the filing date of the further return.

The obligation to make a further return when withdrawal conditions apply rests with the relevant person, who is the person who entered into the arrangements or their successor, not the financial institution (which in many cases may have made the return for the first transaction).

Example

AF1 Properties Ltd enters into an alternative property finance agreement to acquire a freehold residential property for £1m from a third party, to be used exclusively in its property rental business.

The financial institution is acquiring the freehold interest (in the first transaction) and is required to file the SDLT return. Because AF1 Properties Ltd intends to use the property in its property rental business, one of the exclusions from the higher rate charge apply.

Within the control period, the company’s director (a non-qualifying individual) occupies the property, and relief from the single rate of SDLT is withdrawn. Although the financial institution filed the SDLT return for the first transaction, it is AF1 Properties Ltd that must file the further return and pay the additional SDLT due.

Modifications to Schedule 10 FA03 - Returns, enquiries, assessments and appeals

The provisions of FA03/SCH10 apply to a land transaction return made under FA03/S81ZA in the same way as they apply to a land transaction return submitted under FA03/S76, with the following modifications:

• References to a requirement to deliver a land transaction return are read as references to the further return

• References to the transaction to which the return relates shall be read as the withdrawal of relief in respect of which the return is required

• References to a chargeable transaction to which (as yet) no return relates shall be read as the withdrawal of relief

• The effective date of the transaction shall be read as the date on which the disqualifying event occurs, or the relevant date (as appropriate)

• Where a further return is to be made by the relevant successor, any references to the purchaser are to be read as references to the relevant successor

• An appeal is also permitted under para36(5A) Schedule 10 FA03 on the basis that a further return is not required