SDLTM23260 - Reliefs: Group, reconstruction or acquisition relief

Reconstruction and acquisition relief: Withdrawal: Non-exempt transfer following atransaction to which shares acquisition relief applies FA03/SCH7/PARA11(2)

This section applies to the withdrawal of reconstruction or acquisition relief where

  • a chargeable interest has been transferred by means of a transaction that was exempt as a result of share acquisition relief and consequently relief has not been withdrawn due to FA03/SCH7/PARA10(5). See SDLTM23240
  • there is a subsequent non-exempt transfer which changes control of the company which obtained shares in the acquiring company

The effect of this is to withdraw relief when control of a company which holds sharesin the company that acquired the land changes after relief has been claimed. A furtherland transaction return and payment should be made. See SDLTM50400.

Withdrawal of reconstruction or acquisition relief occurs where

  • reconstruction or acquisition relief has been claimed by the acquiring company on a relevant transaction
  • that relief has not been withdrawn because control of the acquiring company changed as a result of a transaction that was exempt becauseof share acquisition relief, but

  • control of the company which obtained shares in the acquiring company as a result of that transaction (or that are derived from those shares) subsequently changes

    • before the end of a period of three years beginning with the effective date of the relevant land transaction (that is the transaction which originally transferred the chargeable interest)

    • in pursuance of or in connection with arrangements made before the end of a period of three years beginning with the effective date of the relevant land transaction

    • the company still holds the shares (or shares derived from those shares) transferred as a result of the transaction to which share acquisition relief applied and

    • the acquiring company or a relevant associated company, at that time (“the relevant time”), holds a chargeable jinteres that

    • was transferred to the acquiring company by the relevant land transaction

    • is derived from the interest that was transferred

    • provided the chargeable interest has not subsequently been acquired at market value by means of a chargeable land transaction where reconstruction or acquisition relief was available but was not claimed