Part 5

Stamp taxes

Stamp duty land tax

Withdrawal of group relief
96
1
Part 1 of Schedule 7 to FA 2003 (group relief) is amended as follows.
2
In paragraph 3(5), for “paragraph 4” substitute “ paragraphs 4 and 4ZA ”.
3
In paragraph 4 (cases in which group relief not withdrawn)—
a
omit sub-paragraphs (2) and (3), and
b
in sub-paragraph (5), for “sub-paragraphs (3) and (4)” substitute “ sub-paragraph (4) ”.
4
After that paragraph insert—

Group relief not withdrawn where vendor leaves group
4ZA
1
Group relief is not withdrawn under paragraph 3 where the purchaser ceases to be a member of the same group as the vendor because the vendor leaves the group.
2
The vendor is regarded as leaving the group if the companies cease to be members of the same group by reason of a transaction relating to shares in—
a
the vendor, or
b
another company that—
i
is above the vendor in the group structure, and
ii
as a result of the transaction ceases to be a member of the same group as the purchaser.
3
For the purpose of sub-paragraph (2) a company is “above” the vendor in the group structure if the vendor, or another company that is above the vendor in the group structure, is a 75% subsidiary of the company.
4
But if there is a change in the control of the purchaser after the vendor leaves the group, paragraphs 3, 4(6) and (7), 5 and 6 have effect as if the purchaser had then ceased to be a member of the same group as the vendor (but see sub-paragraph (7)).
5
For the purposes of this paragraph there is a change in the control of the purchaser if—
a
a person who controls the purchaser (alone or with others) ceases to do so,
b
a person obtains control of the purchaser (alone or with others), or
c
the purchaser is wound up.
6
For the purposes of sub-paragraph (5) a person does not control, or obtain control of, the purchaser if that person is under the control of another person or other persons.
7
Sub-paragraph (4) does not apply where—
a
there is a change in the control of the purchaser because a loan creditor (within the meaning of section 417(7) to (9) of the Taxes Act 1988) obtains control of, or ceases to control, the purchaser, and
b
the other persons who controlled the purchaser before that change continue to do so.
8
In this paragraph references to “control” shall be interpreted in accordance with section 416 of the Taxes Act 1988 (subject to sub-paragraph (6)).
5
In paragraph 4A (withdrawal of group relief in certain cases involving successive transactions)—
a
in sub-paragraph (1), in the words following paragraph (d), for “and 4” substitute “ , 4 and 4ZA ”,
b
after that sub-paragraph insert—
1A
Sub-paragraph (1) has effect subject to sub-paragraph (3A).
,
c
in sub-paragraph (3)—
i
for “sub-paragraph (1)(a)” substitute “ this paragraph ”, and
ii
for “this sub-paragraph” substitute “ this paragraph ”, and
d
after sub-paragraph (3) insert—
3A
Sub-paragraph (1) does not apply where—
a
there is a change in the control of the purchaser because a loan creditor (within the meaning of section 417(7) to (9) of the Taxes Act 1988) obtains control of, or ceases to control, the purchaser, and
b
the other persons who controlled the purchaser before that change continue to do so.
6
The amendments made by this section have effect in relation to transactions with an effective date on or after 13 March 2008.