Stamp duty — Sale and subsale — Property transferred directly to sub-purchaser — Price on sub-purchase payable by instalments over more than 20 years — Whether stamp duty payable on consideration for both sale and subsale — Whether exemption applying — Sections 56(2) and 58(4) of Stamp Act 1891 — Appeal dismissed
The vendor agreed to sell a property to the purchaser for a consideration of £1.3m. The agreement expressly provided that the purchaser had the right to require the vendor to transfer the property to any person that it reasonably nominated. By a subsale agreement of the same date, the purchaser agreed to transfer the property to the appellants. Clause 9 of the subsale agreement provided for the appellants to pay the purchase price by way of a £5,000 deposit, followed by annual instalments of £500 from 2001 to 2024, with a final instalment of the balance. The sale and subsale were subsequently completed by the direct transfer of the property from the vendor to the appellants.
The respondent commissioners made a decision on adjudication, pursuant to section 12 of the Stamp Act 1891, assessing the stamp duty chargeable on the transfer at £52,400, namely: (i) £400 in respect of the consideration payable by instalments over the first 20 years following the sale (£10,000) under the subsale agreement; and (ii) £52,000 in respect of the consideration of £1.3m payable under the sale agreement. The appellants were dissatisfied with that assessment, and, at their request, the commissioners sought the court’s opinion as to whether the transfer was chargeable with duty, and, if not, what amount would be chargeable.
The central issue was the interrelationship between sections 58(4) and 56(2) of the 1891 Act. Section 58(4) provided that, in cases where a property was conveyed directly by a vendor to a sub-purchaser, duty was to be charged only in respect of the consideration moving from the sub-purchaser except where “(a) the chargeable consideration moving from the sub-purchaser is less than the value of the property immediately before the contract of sale to him”. By section 56(2), where the consideration for a sale consisted of the payment of instalments for a definite period not exceeding 20 years, or in perpetuity, or for any indefinite period not terminable with life, the conveyance was to be charged with ad valorem duty on the total amount payable during the 20 years following the day of the instrument.
Held: The appeal was dismissed.
As a matter of principle, and, in the absence of any relevant exemption, a conveyance by a vendor to a sub-purchaser would be chargeable to stamp duty by reference to both the consideration moving from the purchaser and that moving from the sub-purchaser. That was because the conveyance implemented, and gave effect to, both agreements: Escoigne Properties Ltd v Inland Revenue Commissioners [1958] AC 549, Fitch Lovell Ltd v Inland Revenue Commissioners [1962] 1 WLR 1325 and Oughtred v Inland Revenue Commissioners [1960] AC 206 applied. Accordingly, the transfer was chargeable by reference to the amount paid on both agreements unless the appellants could successfully invoke relief under section 58(4).
The quantum of “chargeable consideration” on the sub-purchase was specified in section 56(2): this represented the total of the 20-year instalments (£10,000), and not the full £1.3m consideration for the transfer. Since the consideration to be taken into account was less than the value of the property at the date of the subsale agreement, section 58(4) did not apply, and relief was not available to the appellants. The transfer was therefore chargeable in respect of the full consideration for the property under the sale agreement. Stamp duty was chargeable at £52,400, as assessed by the commissioners.
Leolin Price QC and Evan Price (instructed by Taylor Walton, of Luton) appeared for the appellants; Rupert Baldry (instructed by the solicitor to the Inland Revenue) appeared for the respondents.
Sally Dobson, barrister
