Charities win relief from stamp duty land tax on jointly acquired property

The Court of Appeal has overturned a ruling that denied charities relief from stamp duty land tax (SDLT) when property is bought together with a non-charity. Lewison J allowed appeals by King’s College, London, and the trustee of the Pollen Estate – a trust that benefits registered charities the Church Commissioners and Greenwich Hospital – against a ruling of the Upper Tribunal. He ruled that the Tribunal applied an “unduly literal interpretation” of the Finance Act 2003 in reaching a decision that, when a charity acquires property together with a non-charity that takes a beneficial interest of its own, the charity is not entitled to any relief from SDLT. He found that three charities involved should be entitled to relief from SDLT to the extent of their beneficial interest in the properties concerned. He said that no policy justification had been advanced by Her Majesty’s Revenue and Customs to justify the “anomalous position” in which the three charities in this case found themselves, and to deny a charity relief where it merely participates in a purchase with non-charities. He said that the Tribunal’s decision had the effect that the position under SDLT was the same as under stamp duty, but concluded: “The fact that an anomaly existed under a previous tax regime provides no reason for replicating that anomaly under a new tax regime.” Ruling that there was a sufficient “policy imperative” to allow the appeals, he said: “In substance what this means is that the exemption would apply as regards that proportion of the beneficial interest that is attributable to the undivided share held by the charity for qualifying charitable purposes. “I do not see that this gives rise to any conceptual uncertainty or any insuperable practical administrative problems. “In my judgment this reading is necessary in order to give effect to what must have been Parliament’s intention as regards the taxation of charities.” He said that there was no principled reason why a charity should be exempt from SDLT in respect of investments for charitable purposes in a range of other situations – including when a charity buys property in its own name; where two or more charities buy property together; where a non-charity acquires property as a bare trustee for one or more charities; and where a charity acquires an existing beneficial interest as an investment – but not entitled to any relief at all on its proportionate share in a jointly acquired property. “Not to afford a charity relief in such circumstances would, in my judgment, be capricious,” he added. The Pollen Estate has more than 100 beneficiaries, only two of which are charitable – the Church Commissioners (whose share is 64%) and the Secretary of State for Defence as trustee for the Greenwich Hospital (10%). Its appeal concerned four commercial properties in London bought between 2006 and 2008. King’s College operates a shared equity scheme for employees, and its appeal involved the purchase of a flat in Clink Street, London SE1, held on trust by a professor as to 46.3% for the College and 53.7% for himself. The Pollen Estate Trustee Company Ltd and anr v The Commissioners for Her Majesty’s Revenue and Customs Court of Appeal (Laws, McFarlane and Lewison LJJ) 26 June 2013J Peacock QC (instructed by Eversheds LLP) for the first appellantA Hitchmough QC and Zizhen Yang (instructed by Mills & Reeve LLP, Cambridge) for the second appellantA Tipples QC (instructed by General Counsel & Solicitor to HMRC) for the respondents