B Ltd is 100% owned by A Ltd. C Ltd is also 100% owned by A Ltd.
D Ltd is 100% owned by B Ltd. These four companies form a group for
the purposes of Stamp Duty Land Tax.
D Ltd (the vendor) transfers the freehold interest in a
parcel of land to C Ltd (the purchaser) for no consideration on
25/06/04. This is the relevant transaction. The market value of the
freehold interest is £1,000,000 on 25/06/04. C Ltd claims
group relief in respect of the transfer.
A Ltd then sells the shares in B Ltd to an unconnected third
party on 07/07/06. The market value of the freehold interest is
£1,750,000 on 07/07/06. As a result of the sale of shares, B
Ltd leaves the group on 07/07/06 (and D Ltd goes with it as it is a
100% subsidiary of B Ltd).
Group relief is not withdrawn. This is because the only
reason the purchaser (C Ltd) has ceased to be a member of the same
group as the vendor (D Ltd) is because the vendor has left the
group as a result of a transaction in another company (B Ltd).
This would also apply if instead of A Ltd selling all the
shares in B Ltd, it only sold enough shares so that it no longer
owned 75% of them and thus B Ltd (and D Ltd) were no longer
grouped.
