Summary and implications
HMRC has published its view of the Court of Appeal's decision in the joint cases of (1) The Pollen Estate Trustee Company Limited and (2) Kings College London v HMRC.
Charities can claim refunds for any overpaid Stamp Duty Land Tax (SDLT) on purchases of properties jointly with non-charity purchasers.
The key points about the ability to claim are:
- the relief is limited to circumstances where the charity has used the greater part of its share of the property for charitable purposes;
- the normal time period of 12 months applies; and
- charities will have to demonstrate the size of their shares in the properties and the charitable purposes.
Background
Earlier this year the Court of Appeal held that when a charity purchases property jointly with a non-charity the charity can claim relief from SDLT on its share of the property. The relief is available if the charity intends to hold the land for qualifying charitable purposes and the transaction has not been entered into for the purpose of avoiding tax, whether by the buyer or any other person.
The Court of Appeal confirmed that for SDLT purposes a joint purchase is to be treated as the acquisition of a single chargeable interest. Given that the applicable rate of SDLT is determined by reference to the chargeable consideration for the whole interest, although the charity does not pay SDLT on its share, the non-charity does pay SDLT and the applicable rate of SDLT is that which would be applied to the whole chargeable consideration even though a charity can claim relief in relation to their "part".
HMRC's notice on the judgment
HMRC has chosen not to appeal the judgment but to publish its view of the judgment on its website.
HMRC is inviting claims for any overpaid SDLT from charities that purchased properties jointly with non-charity purchasers and relief was available to them but they did not claim it. However, a charity's ability to claim is limited to cases where it used the greater part of its share of the property for a charitable purpose.
Procedure for making a claim
To make a claim a charity should write to HMRC setting out how the original land transaction return should be amended and the unique transaction reference number for the original return. The charity will also need to send the purchase contract and any document that show the size of its share of the property, for example a trust deed or agreement, and to state the charitable purposes for which the property will be used.
The charity would then receive a refund of the overpayment together with interested calculated from the time when the SDLT was paid.
Time limit for claims
Paragraph 6 of Schedule 10 to the Finance Act 2003 provides that an amendment to a land transaction return can be made no later than 12 months after the return's filing date, which is 30 days after the effective date of the purchase. HMRC has not given an extension to this time limit for refund claims following the Pollen Estate judgment so claims made after the 12-month period will be time-barred. This seems particularly harsh as few charities will have lodged protective claims in advance due to the costs involved.
Charities can claim relief from SDLT on a joint purchase (12/7/13). To read our previous briefing on The Pollen Estate case click here.
To read HMRC's notice in full click here.
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