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Partial Win for Taxpayer in SDLT and ATED Relief Case

  • Nick Jenkins
  • Nov 3
  • 2 min read
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A recent Upper Tribunal (UT) decision has provided clarity on the availability of Annual Tax on Enveloped Dwellings (ATED) relief and Stamp Duty Land Tax (SDLT) relief in certain property development scenarios.

Background

The case, Investment and Securities Trust Limited v HMRC, concerned a company that had acquired an option over a property. The company argued that it should be entitled to:

  1. Relief from higher rates of SDLT

  2. ATED relief

The First Tier Tribunal (FTT) had previously ruled that neither relief was available, but the Upper Tribunal revisited the statutory tests.

The Company’s Objectives

The company had acquired the option for three reasons:

  1. To address a director/shareholder’s pressing need for funds

  2. To prevent a sale to a third party

  3. To allow time to raise development finance

Tribunal Findings

Higher Rate SDLT Relief:

  • The UT agreed with the FTT that higher rate SDLT relief was not available.

  • The legislation requires that the chargeable interest is acquired exclusively for development or redevelopment and resale.

  • Because the company acquired the option partly to meet purposes 1 and 2, this condition was not met.

ATED Relief:

  • The UT found that the FTT had misinterpreted the statutory test for ATED relief.

  • The relevant question is whether the interest is held exclusively for development and resale once acquired.

  • In this case, after acquisition, the sole remaining purpose for holding the option was development, satisfying the statutory test.

  • As a result, the UT allowed the ATED relief appeal.

Implications for Taxpayers

This case highlights that:

  • Purpose at the point of acquisition and purpose after acquisition can lead to different outcomes for reliefs.

  • Careful planning and documentation of a company’s intentions when acquiring property interests is essential to maximise reliefs.

  • Even partial wins can significantly reduce tax liabilities, as demonstrated by the successful ATED relief claim.

At SJC, Chartered Accountants, we help clients navigate complex property tax reliefs, ensuring that opportunities for ATED and SDLT relief are fully considered and appropriately documented.

If your business or property development company may be affected by similar reliefs, contact us to discuss your options and plan strategically.

 
 
 

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