LBTT3026 - Withdrawal of group relief

Group relief (see LBTT3025) is withdrawn if the buyer ceases to be a member of the same group as the seller:

• within three years beginning with the effective date of the transaction; or
• in pursuance of, or in connection with, arrangements made within that three year period; and
• at the time the buyer ceases to be a member of the same group the buyer holds:
  • the chargeable interest that was acquired under the relevant transaction, or a chargeable interest derived from  the chargeable interest acquired under the transaction; and (in either case)
  • the chargeable interest has not subsequently been acquired at market value where group relief was available but not claimed.

Group relief is also withdrawn where:

• relief was solely available by virtue of the arrangements mentioned in paragraph 10A; and
• within three years beginning with the effective date of the transaction, paragraph 10A ceases to apply to the arrangements.

Note: If a loan is repaid before the end of the three year period beginning with the effective date of the transaction, relief is not withdrawn as there are no longer any arrangements to which paragraph 10A could apply.

LBTT(S)A 2013 schedule 10 paragraphs 13, 14 and 15

Amount of tax chargeable where group relief is withdrawn

Where group relief is withdrawn, the LBTT payable is what would have been payable in respect of the original land transaction. The chargeable consideration for the transaction is calculated as the market value of the chargeable interest transferred by the original land transaction or rent in a transaction involving leases.

LBTT(S)A 2013 schedule 10 paragraphs 16 and 17

Amount of tax chargeable where group relief is partially withdrawn

Where group relief is partially withdrawn, the LBTT payable is an appropriate proportion of the original land transaction for which group relief was claimed.

The appropriate proportion must reflect the proportion of market value of the chargeable interests held by the buyer at the time of withdrawal of group relief compared to the full market value of the chargeable interest obtained by the buyer at the effective date of the relevant land transaction.

LBTT(S)A 2013 schedule 10 paragraphs 18 and 19

It is the responsibility of the buyer to make a LBTT return to us if group relief is withdrawn to any extent.