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Is SDLT chargeable on property transfers to recoup a director’s loan?
We act for a residential property development business that is a trading company. It entered into a members’ voluntary liquidation in March 2016 to avoid the consequences of the tax changes to distributions in a winding-up in Finance Bill 2016. Properties were transferred to the shareholders before 6 April 2016 as distributions in specie which did not attract stamp duty land tax (SDLT).
One of the directors who is a 50% shareholder loaned a substantial sum of money to the company to finance the development costs of the trading activity. It is likely that at the end of the 12-month liquidation period the liquidator may be left with a number of unsold residential development properties.
The plan would be to transfer these unsold properties to the director/shareholder as settlement of his unpaid loan balance with the company.
Our query is whether SDLT would be payable by him on these transfers.
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