SCHEDULES
SCHEDULE 7Stamp duty land tax: group relief and reconstruction and acquisition reliefs
Part 2Reconstruction and acquisition reliefs
Acquisition relief
8
1
Where—
a
a company (“the acquiring company”) acquires the whole or part of the undertaking of another company (“the target company”), and
b
F3all the conditions specified below are met,
the F5amount of tax chargeable on a land transaction entered into for the purposes of or in connection with the transfer of the undertaking or part is limited to F6an amount equal to 0.5% of the chargeable consideration for the transaction.
Relief under this paragraph is referred to in this Part as “acquisition relief”.
2
The first condition is that the consideration for the acquisition consists wholly or partly of the issue of non-redeemable shares in the acquiring company to—
a
the target company, or
b
all or any of the target company’s shareholders.
“Non-redeemable shares” means shares that are not redeemable shares.
3
Where the consideration for the acquisition consists partly of the issue of non-redeemable shares as mentioned in the first condition, that condition is met only if the rest of the consideration consists wholly of—
a
cash not exceeding 10% of the nominal value of the non-redeemable shares so issued, or
b
the assumption or discharge by the acquiring company of liabilities of the target company, or
c
both of those things.
4
The second condition is that the acquiring company is not associated with another company that is a party to arrangements with the target company relating to shares of the acquiring company issued in connection with the transfer of the undertaking or part.
F45
For this purpose companies are associated if one has control of the other or both are controlled by the same person or persons.
The reference to control shall be construed in accordance with section 416 of the Taxes Act 1988.
F15A
The third condition is that the undertaking or part acquired by the acquiring company has as its main activity the carrying on of a trade that does not consist wholly or mainly of dealing in chargeable interests.
In this sub-paragraph “trade” has the same meaning as in the Taxes Act 1988.
F25B
The fourth condition is that the acquisition is effected for bona fide commercial reasons and does not form part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax.
“Tax” here means stamp duty, income tax, corporation tax, capital gains tax or tax under this Part.
5C
In this paragraph “arrangements” include any scheme, agreement or understanding, whether or not legally enforceable.
6
This paragraph is subject to paragraph 9 (withdrawal of reconstruction or acquisition relief).