UT (Tax & Chancery) UT/2022/0092 - [2024] UKUT 00373 (TCC)

In The Tower One St George Wharf Limited v HMRC [2022] UKFTT 00154 (TC) (the “Decision”), the First-tier Tribunal (the “FTT”) dismissed the appeal of The Tower One St George Wharf Limited (“Tower One”) against an assessment to stamp duty land tax (“SDLT”) on its acquisition from another company in the same group of a 999-year lease in respect of a residential property development known as “the Tower” (the “Tower Lease”).

The FTT found that there were bona fide commercial reasons for the transfer of the Tower Lease from Berkeley Sixty-Four Limited (“B64”) to Tower One (the “Transaction”), but Tower One was not entitled to group relief as the Transaction formed part of arrangements of which one of the main purposes was the avoidance of liability to tax. Further, SDLT was to be assessed on the market value of the Tower Lease and not the actual consideration.

Tower One was granted permission to appeal by the FTT, and following a renewed application to the Upper Tribunal it was confirmed that this permission extends to:

In their Respondents’ Notice, HMRC confirmed that they were no longer pursuing certain arguments that had formed part of their submissions to the FTT, but maintained their alternative argument that s75A Finance Act 2003 (“FA 2003”) applied to the arrangements in the event that the SDLT payable by Tower One was less than the amount of SDLT that would have been payable on a notional land transaction effecting the acquisition of the chargeable interest (ie the Tower Lease) by Tower One at market value.

We appreciated the clear and helpful written and oral submissions from both parties. We have not found it necessary to refer to all of those submissions, but have taken them all into account in making our decision.

References to numbers in square brackets are to paragraphs of the Decision unless the context indicates otherwise, and references to section numbers and schedules are to sections and schedules of FA 2003.