What is “possession”, and why does it matter for your SDLT return?
How can early access for works impact SDLT liability? In the recent Goldsmith decision (Goldsmith Ltd and another v HMRC), the First-Tier Tribunal (FTT) explored the meaning of “possession” and its significance for SDLT purposes.
Taking possession of property is one of the ways in which a land contract can be “substantially performed”, triggering liability to pay SDLT before completion. The timing of substantial performance can be an important consideration for purchasers in terms of cashflow, and in some cases can also impact the amount of SDLT due.
In Goldsmith, the purchaser had not substantially performed a contract despite carrying out significant pre-completion works. Various agreed conditions to the early access meant the purchaser did not have the freedom to occupy the property “as owner”, and the purchaser did not have responsibility for the property and liability for the outgoings.
Whilst not a binding precedent, the case is interesting as one of few instances where substantial performance has been considered by the courts, and serves as a reminder of the importance of taking SDLT advice early on in a transaction.
To find out more about when early access may trigger SDLT liability, see our article on the Goldsmith case here.
“…taking possession of the subject matter of the contract” requires the buyer to go into occupation of the property as if they had become the owner at that point. They may have to comply with conditions or limitations under the contract, lease, licence or other agreement, but there must be an element of freedom to occupy as and when they wish…”