Advanced Taxation (UK) · Corporation tax: the effect of a group structure

Stamp Taxes and VAT in a Group Context for ATX

Updated 11 October 2026 · Fact-checked

In a group, transfers between companies can often avoid SDLT and stamp duty if group relief conditions are met, but relief can be clawed back if the buyer leaves the group within a set period. A VAT group treats members as one taxable person, ignoring supplies between them. You then weigh the benefits against the drawbacks.

Understand Stamp Taxes and VAT in a Group Context

A group of companies is often one commercial unit. The tax system does not always treat it that way. Moving a property or shares from one group company to another can trigger stamp taxes, and each company is normally a separate VAT registrant. Group reliefs and VAT grouping reduce this friction.

Stamp duty land tax (SDLT) applies to land transactions. For non-residential property, the rates in your ATX tax tables are 0% up to £150,000, 2% on £150,001 to £250,000 and 5% above £250,000. These rates apply slice by slice. Stamp duty on shares is 0.5% of the consideration.

Group relief from SDLT and stamp duty exempts transfers between companies in the same group. The group test and the conditions below are general UK law. They are not shown in the tax tables, so you must learn them. For this purpose, companies are in a group broadly where one is a 75% subsidiary of the other (or both are 75% subsidiaries of a third company). The 75% test is based on ordinary share capital. The relief is not automatic in every case. Transfers made as part of arrangements, for example where the buyer is to leave the group or where a third party is to acquire the property, can fall outside it.

Clawback is the key exam point for SDLT. Under general UK law, if the buyer company ceases to be a member of the same group as the seller within three years of the transfer while still holding the property (or an interest in it), the SDLT that was relieved becomes payable. The charge is calculated on the market value of the property at the date the buyer leaves the group, not at the date of the original transfer. The three-year period and the market value basis are not in the tax tables, so learn them. Stamp duty on shares has no three-year SDLT-style clawback. However, stamp duty relief is denied or withdrawn where the transfer is part of arrangements for the buyer to leave the group or for a third party to acquire the shares.

VAT grouping is optional and needs HMRC approval. Bodies corporate under common control can apply to HMRC to form a VAT group. The group is a single taxable person, with one VAT return, and a representative member accounts for the VAT. Supplies between members are disregarded for VAT. The standard rate is 20%. The group's taxable turnover is tested against the £90,000 registration limit given in the tax tables. All members are jointly and severally liable for the group's VAT. Practical advantages include less paperwork and a cash flow benefit where one member makes supplies to another. A benefit for a partly exempt group depends on the facts, because grouping can help or hurt.

Key rules to remember

SDLT on non-residential property: 0% to £150,000; 2% on £150,001 to £250,000; 5% above £250,000; Applied slice by slice (tax table). Example: price £400,000 = £2,000 + £7,500 = £9,500.
Stamp duty on shares: 0.5% × consideration; Rate from the tax tables. Intra-group transfers can be exempt if the group relationship is met and there are no disqualifying arrangements.
Group relationship for stamp taxes: One company is a 75% subsidiary of the other (or both are 75% subsidiaries of a third), based on ordinary share capital; General UK law. Learn this test. It is not in the tax tables.
SDLT group relief clawback: Buyer leaves the seller's group within 3 years of the transfer while holding the property → relief withdrawn; General UK law, not in the tax tables. SDLT is charged on the market value at the date the buyer leaves the group, not at the date of the original transfer.
VAT group: One taxable person; intra-group supplies ignored; Bodies corporate under common control apply to HMRC. Group taxable turnover is tested against the £90,000 registration limit. Standard rate 20% and the limit are from the tax tables. Members are jointly and severally liable.

How to solve Stamp Taxes and VAT in a Group Context questions

Use this order for any question on stamp taxes or VAT in a group. It stops you missing clawback or the liability point.

1Identify the transaction: land (SDLT), shares (stamp duty) or a VAT supply.
2Check the group relationship. For stamp taxes, test for the 75% ordinary share capital link between the companies.
3State whether group relief applies and give the SDLT or stamp duty that would be due without it, using the table rates.
4Look for clawback triggers: a planned sale of the buyer company, a demerger, or the buyer leaving the group within three years while holding the land.
5If clawed back, recompute SDLT on the market value of the property at the date the buyer leaves the group.
6For VAT, decide whether grouping is possible and list the advantages and disadvantages against the facts given.
7Conclude with a clear recommendation and mention the cash flow and risk effects.

Quickest way: Group relief or clawback check in four lines

When to use it: Use when a question gives a short scenario about a transfer between companies and asks about the tax cost.

Write the group test: parent holds at least 75% of ordinary share capital.
Compute the tax that would apply without relief: SDLT slices or 0.5% for shares.
State the relief and the three-year clawback condition for SDLT.
Add the VAT point: no VAT on intra-group supplies if grouped, with joint liability.

Common mistakes in Stamp Taxes and VAT in a Group Context

Applying the SDLT rates to the whole price instead of slices.
Students remember the percentages but not how they are applied.
Fix: Calculate each band separately: nil to £150,000, 2% on the next £100,000, 5% on the rest.
Forgetting SDLT clawback when the buyer leaves the group.
The question focuses on the transfer and the later sale of the subsidiary is easy to overlook.
Fix: Read the scenario for any planned disposal of the buyer within three years and recompute SDLT on the market value when the buyer leaves.
Using the transfer price or the value at the date of transfer for clawback.
Students assume the original transaction governs the later charge.
Fix: State that, under the general rule outside the tax tables, clawback is based on the market value of the property at the date the buyer leaves the group.
Treating stamp duty on shares as having the same three-year clawback as SDLT.
Both reliefs are called group relief.
Fix: Keep them apart. Only SDLT has the three-year clawback. For stamp duty, check whether the transfer is part of arrangements for the buyer to leave the group or for a third party to acquire the shares, because relief can then be denied or withdrawn.
Listing VAT group advantages only.
Students recall the paperwork saving and stop.
Fix: Always add the drawbacks, especially joint and several liability, and show why they matter in the facts.

Worked examples

Example 1

Alpha Ltd owns 100% of the ordinary shares of Beta Ltd and Gamma Ltd. Beta Ltd transfers a non-residential building worth £400,000 to Gamma Ltd for £400,000. Two years later Alpha Ltd sells all the shares in Gamma Ltd. Gamma still holds the building, now worth £450,000. Explain the SDLT position.

Show the solution

Alpha holds 100% of each company, so Beta and Gamma are both 75% subsidiaries of Alpha and are in the same group. Group relief applies to the transfer and no SDLT is due at the time.
Gamma leaves the group two years after the transfer, which is within three years, and still holds the building.
Under the general clawback rule (not in the tax tables), the relief is withdrawn and SDLT is charged on the market value at the date Gamma leaves the group, £450,000.
SDLT: 0% on £150,000 = £0; 2% on £100,000 = £2,000; 5% on £200,000 = £10,000.
Total = £12,000. The £400,000 value at the date of the original transfer is ignored.

Answer: No SDLT arises on the transfer, but £12,000 becomes payable when Gamma leaves the group.

Example 2

Delta Ltd owns 90% of the ordinary shares of Epsilon Ltd. Delta transfers shares in a third company to Epsilon for £60,000. State the stamp duty position, and the stamp duty that would be due without relief.

Show the solution

Delta holds 90% of Epsilon's ordinary share capital, so Epsilon is a 75% subsidiary and the companies are in a group.
Group relief therefore exempts the transfer from stamp duty, provided the transfer is not part of arrangements for Epsilon to leave the group or for a third party to acquire the shares.
Without relief, stamp duty is 0.5% × £60,000 = £300.

Answer: The transfer is exempt under group relief, so nothing is due. Without relief, stamp duty would have been £300.

Exam tips

Learn the 75% group test and the three-year SDLT clawback. The tax tables do not give them.
Show the SDLT slice calculation in your workings. Marks go for method even if the figure slips.
Write VAT group answers as a balanced list of advantages and disadvantages, then link each point to the scenario.
Use the professional skills marks: give a clear recommendation and mention any risk the client should know about.

Practice questions from Corporation tax: the effect of a group structure

Stamp Taxes and VAT in a Group Context in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ProfessionalIndian Stamp Act, 1899: Stamp Duty and Instruments

Stamp Taxes and VAT in a Group Context: frequently asked questions

Is stamp duty on shares 0.5% for group transfers?

The rate is 0.5% of the consideration. A transfer between group companies can be exempt if the group relationship test is met, so the rate is the amount that would be due without relief.

When is SDLT group relief clawed back?

It is withdrawn if the buyer company ceases to be a member of the same group as the seller within three years of the transfer while still holding the property. SDLT is then calculated on the market value of the property at the date the buyer leaves the group.

What are the advantages of VAT group registration?

The group files one VAT return and supplies between members are ignored for VAT. This reduces administration and can help cash flow. You should also mention the drawbacks, such as joint and several liability.

What are the disadvantages of a VAT group?

All members are jointly and severally liable for the group's VAT. Grouping can also reduce recovery for a partly exempt group depending on the facts. Weigh these against the savings.