Summary and implications

The latest draft of the Finance Bill 2014, published on 27 March 2014, contains new provisions making it clear that partial charities relief is available when a charity jointly purchases property with a non-charity. The introduction of this legislation will make it difficult for anyone to argue that the decision in the Pollen Estate case should apply to other types of Stamp Duty Land Tax (SDLT) relief.

Background

In June 2013, the Court of Appeal overturned the decision of the Upper Tribunal in the case of Pollen Estate Trustee Company Limited and King's College London v HMRC and held that charities relief was available to a charity where it had jointly acquired property with a person other than a charity.

Draft Finance Bill 2014

As promised in the 2013 Autumn Statement, the draft Finance Bill 2014 contains provisions to codify the decision in the Pollen Estate case. The draft provisions make it clear that charities may obtain partial relief on joint purchases with non-charities, provided they use the greater part of their share of the property for a qualifying charitable purpose.

The relief will apply to a proportion of the usual SDLT calculation, determined by reference to the lower of:

  • the charity's share of the consideration paid; and
  • the charity's share of the property acquired.

The SDLT payable by the non-charity purchaser on its share of the property will be calculated using the rate appropriate for the total consideration paid by all the joint purchasers including the charity.

Application of the Pollen Estate case to other SDLT reliefs

Following the decision in Pollen Estate, there was some uncertainty as to whether, and to what extent, the principles in this case could be extended to other types of SDLT relief such as group relief.

However, at a recent meeting of the SDLT Working Together Steering Group, a representative for HMRC stated that HMRC's view was that the decision focused solely on charities relief and did not impact on other SDLT reliefs.

In addition, now that the Finance Bill includes draft provisions to codify the decision in Pollen Estate, and these provisions are limited solely to charities relief, it would be very difficult to argue that similar principles should be applied to other types of relief.

Comment

The new provisions confirming the availability of partial charities relief will come into effect once the Finance Bill receives Royal Assent. However, given that HMRC invited claims from charities for any overpaid SDLT on joint purchases with non-charities following the Court of Appeal's decision, charities will likely still be able to obtain relief for any joint purchases occurring prior to Royal Assent.

By codifying the Pollen Estate decision through the Finance Bill 2014, the Government has made it clear that it interprets the decision as only being relevant to charities relief. Therefore the scope of this decision is interpreted to be narrower than it might have been and this decision is unlikely to be able to be relied upon to seek other partial reliefs from SDLT.

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