SDLTM50900A - Procedure: deferring payment in case of contingent or uncertain consideration FA03/S90: when application may be made: examples
Example 1
A purchaser acquires land in January 2021 and pays the vendor £350,0000 upfront and plans to make later payments of £50,000 for each set out of 50 houses for which planning permission to build is granted. The purchaser expects to get planning permission for 200 houses.
The purchaser makes an application to defer the payment of tax because the amount payable to the vendor is uncertain and the application is successful. Obtaining planning permission is taken to be the relevant event for the purposes of the regulations found in Part 4 of the Stamp Duty Land Tax (Administration) Regulations 2003 (2003/2837).
SDLT is still due on £350,000, as per s90(5) FA2003, within the normal time limits as this initial payment is not contingent and has been paid. This is calculated as follows:
| Charge | SDLT due |
|---|---|
| 0% on the first £150,000 = | £0 |
| 2% on the next £100,000 = | £2,000 |
| 5% on the remainder = | £5,000 |
| Total SDLT due = | £7,000 |
As expected, the purchaser does receive planning permission for 200 houses, and he makes a further payment to the vendor of £200,000.
Further SDLT of £10,000 is due and the purchaser will need to make a further return to HMRC within 30 days of the relevant event. This has been calculated as follows:
Total consideration = £350,000 + £200,000 = £550,000
| Charge | SDLT due |
|---|---|
| 0% on the first £150,000 = | £0 |
| 2% on the next £100,000 = | £2,000 |
| 5% on the remainder = | £15,000 |
| Total SDLT due = | £17,000 |
| SDLT previously paid = | £7,000 |
| Further SDLT now due (£17,000 - £7,000) = | £10,000 |
Example 2
The circumstances are similar to Example 1 but the initial payment by the purchaser is for £100,000. The purchaser will still pay £50,000 for each set of 50 houses for which planning permission to build is granted and expects that planning permission for 200 homes will be granted.
As in Example 1, the purchaser makes an application to defer the payment of tax and is successful. The relevant event is the same as before i.e. obtaining planning permission.
No SDLT initially arises because the purchaser has only paid £100,000 to the vendor, and the rest of the tax is deferred.
Several months later, the purchaser actually receives planning permission to build 300 houses on the land acquired so makes a further payment to the vendor of £300,000. The chargeable consideration for the transaction now totals £400,000 and the purchaser will need to make a further return to HMRC within 30 days of the relevant event. The total SDLT now due is:
| Charge | SDLT due |
|---|---|
| 0% on the first £150,000 = | £0 |
| 2% on the next £100,000 = | £2,000 |
| 5% on the remainder = | £7,500 |
| Total SDLT due = | £9,500 |