Problematic connections

KEY POINTS

• A market value charge usually arises where a company acquires a property from a connected person.
• Modified market value rules apply for certain partnership transactions.
• Stamp duty land tax implications of sub-sales between connected parties.
• Inter-group rental arrangements must be documented.

Property transactions between or involving connected parties can be problematic. Unexpected stamp duty land tax (SDLT) liabilities can arise from a failure to document such transactions as well as unfamiliarity with the rules. This article focuses on certain categories of connected party transactions that can cause problems.

Corporation Tax Act 2010 s 1122 determines whether parties are “connected” for SDLT. The provision as supplemented by CTA 2010 s 1123 which incorporates the tests for “control” in CTA 2010 s 450 and s 451 is tortuous and...