Hello,
We have a new HMRC Agent update, a new, and maybe controversial HMRC interpretation of the purchase of own shares rules, plus some interesting cases and updates.
We detected that HMRC had changed its view on certain aspects of the qualifying conditions for a purchase of own shares (POS) when it declined to provide clearance on a couple of applications involving multiple completion contracts. It took a while to work out the issues, and now HMRC has described its thoughts in detail. Whether its new interpretation, as detailed below, will ever be tested by the tribunals remains to be seen, as there are other ways to achieve a buy out of retiring shareholders, some of which are also much easier for lawyers to draft.
Bring on the sheep! We have the outcome of two long-running Stamp Duty Land Tax (SDLT) appeals in which two sets of taxpayers purchased houses 'with land'. In each case it was a paddock comprising a couple of acres. Both expected their land to be non-residential, as it 'obviously' was 'land land' and not part of the garden. Not so, said the Court of Appeal (CoA) on finding that the SDLT legislation places no size limit when it comes to the scale of the grounds of a residential property. The taxpayers' land purchases were thus found to be residential and subject to a higher rate of SDLT than had the land been non-residential and a mixed rate applied. The outcome is very confusing for taxpayers who might think that Parliament would set a size limit for grounds in SDLT, just as there is for Capital Gains Tax Private Residence Relief.
Now that we have that decision in the bag, it would be quite useful to set a limit for residential grounds, as a typical 'equine' property could be sold with land from about one to 20+ acres. As things stand, based on this decision all that land could be deemed to be residential if it is just used by the owners for domestic pleasures. A pragmatic solution is presumably to use the land for commercial farming before and during the sale process, hence 'bring on the sheep'. Other farm animals are available from normal agricultural outlets.
Back soon,
Nichola Ross Martin FCA CTA (Fellow)
Tax Director
Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
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