Transferring part of garden land with planning permission to own limited company - Stamp Duty Calcs

davidmcn

MobileSaver said:

SDLT_Geek said:

unforeseen said:

 a “dwelling” means a building or part of a building which is suitable for use as a single dwelling or is in the process of being constructed or adapted for such use.
I see the argument that having planning permission means that it is in the process of being constructed as PP must be an initial step of the construction. 

I see the efforts involved in obtaining planning permission as preliminary steps before works of construction start.

Clearly the definition can be read in two ways but I agree with @unforeseen in this particular case and can see HMRC winning this one.

The key phrase is as highlighted "in the process"  and I am finding it difficult to see how obtaining planning permission would not be seen as the beginning of the process to construct a dwelling.

Of course that then opens a can of worms; is simply applying for planning permission also part of the process regardless of whether it is subsequently approved or refused?

I would say "being constructed" has its normal English meaning. You wouldn't say the house is in the process of being constructed if absolutely nothing has happened on site.

It's the norm for developers to complete their purchases after planning is granted, and would be a bit peculiar if, say, Barratt bought a farm and had to pay SDLT on the assumption it already had 100 houses on it. 

MobileSaver

davidmcn said:

I would say "being constructed" has its normal English meaning. You wouldn't say the house is in the process of being constructed if absolutely nothing has happened on site.

I agree with your first bit but that's the point really; the definition does not just say "a dwelling means a building ... being constructed", it specifically says "a dwelling means a building ... in the process of being constructed." The "in the process of" appears to be superfluous unless the intention was to cover cases like the OPs.

To take it to extremes, is digging a trench for future services from a neighbouring plot of land classed as "being constructed"?

davidmcn said:

It's the norm for developers to complete their purchases after planning is granted, and would be a bit peculiar if, say, Barratt bought a farm and had to pay SDLT on the assumption it already had 100 houses on it. 

I have no experience of what SDLT developers pay or whether the extra 3% even applies to them, perhaps @SDLT_Geek does?

However I would always have assumed that a developer would pay much more SDLT on land with planning permission than on that without planning permission.

davidmcn

MobileSaver said:

davidmcn said:

I would say "being constructed" has its normal English meaning. You wouldn't say the house is in the process of being constructed if absolutely nothing has happened on site.

I agree with your first bit but that's the point really; the definition does not just say "a dwelling means a building ... being constructed", it specifically says "a dwelling means a building ... in the process of being constructed." The "in the process of" appears to be superfluous unless the intention was to cover cases like the OPs.

I wouldn't say there's any material difference. Getting planning doesn't mean you've started construction, or that construction will ever actually start.

I have no experience of what SDLT developers pay or whether the extra 3% even applies to them, perhaps @SDLT_Geek does?

I do, and until this thread I've never heard of the argument being made here.

However I would always have assumed that a developer would pay much more SDLT on land with planning permission than on that without planning permission.

Yes, because the consideration will be higher, not because the planning status makes a difference to the category of SDLT being levied.

SDLT_Geek

The key here to the definition is that there has to be a "building" in the course of construction.  That comes up frequently in the context of VAT where there is the concept of a "golden brick" when works get beyond foundations.  For SDLT there is HMRC guidance here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00400 where it says:

"The process of construction or adaptation must be physically underway for this category to apply. HMRC do not consider obtaining planning permission on its own to be part of this process, if work on the property in line with the planning permission has not yet commenced at the effective date of transaction (EDT). However, if construction or adaptation has begun at the EDT, then the planning permission would be a strong indicator of what the building is to be used for i.e. whether it should be treated as a residential or non-residential property.

Relevant properties that are in the process of being constructed will be treated as dwellings at the point where building works on top of the foundations have begun. This will be more than a hole in the ground. Furthermore, preparatory works, including demolition of previous buildings, site preparation etc., are not considered sufficient to determine that construction of a dwelling has started. These may be considered ‘construction works’ but they do not involve the construction of the building for use as a dwelling, as the legislation specifies"