ACCA Advanced Taxation (ATX) Practice Exam

When is SDLT payable in relation to a company leaving a group?

1. Only if the transferor company leaves the group

2. Whenever a company leaves a group

3. Only if the transferee company leaves within three years

4. SDLT is never payable on group exits

The correct answer is: Only if the transferee company leaves within three years

The correct answer is that SDLT is payable only if the transferee company leaves the group within three years. This relates to the rules surrounding Stamp Duty Land Tax (SDLT), where certain reliefs are available when a property is transferred between companies that belong to the same group. When a company leaves a group, any SDLT implications depend on the circumstances of the exit. If the transferee (the company receiving the property) departs the group within three years of the transfer, this may trigger an SDLT charge. The reasoning behind this rule is to prevent tax avoidance by ensuring that companies do not take advantage of group relief for property transfers but then quickly exit the group, thus closing the door on the SDLT liability that would normally arise if the companies were not part of the same group. Other options suggest either that SDLT is payable under different conditions or not at all. However, the specific focus of group relief and its associated conditions is key to understanding why the correct answer emphasizes the timing of the company’s exit in relation to the transferee. Understanding these provisions is essential for tax compliance and planning within corporate group structures.