licence: if the buyer gets a contractual licence (not a lease) then the transaction is outside SDLT. But, this assumes the buyer will be happy with the lesser protection of a licence (and also do not forget that it is not enough for the parties simply to label their contract a licence);

building licence: with a developer, there could be no contract of sale between the seller and the developer but instead the developer enters onto the land as licensee and builds the development in consideration of being entitled to receive a sum of money by reference to the sale proceeds from the completed development. The problem with this is that for it to work the developer cannot acquire a ‘chargeable interest’. But, in reality, the developer will normally want to market the development and receive the sale proceeds (subject to any overage going to the seller). However, if the developer has the right to receive the sale proceeds under a specifically enforceable contract which requires the seller to sell the land, then that will be interest in land and so SDLT will apply;

security interest: if a bank assigns its charge in a property to another bank then that is an exempt security interest (no SDLT). Arguably, this could apply if the bank assigns its interest to another individual or company (eg A acquires B’s land, not by buying direct from B, but by purchasing the mortgagee’s security interest and then enforcing it against B – so A ends up owning the property without having to pay SDLT, save on B’s equity in the property). Note that it is not possible to simply buy the property by paying the mortgagee to take over the mortgage, and at the same time pay the equity to the seller, because if the buyer releases the seller from the debt then the debt becomes chargeable consideration. In practice, such arrangements are complex although they might be of use if, for instance, the seller is insolvent and the mortgagee is preparing to enforce its charge in any event. In that situation the buyer will not have to pay SDLT if he acquires the benefit of the bank’s interest as mortgagee direct from the bank and then enforces the charge himself;

building works: if a developer is both selling land to a buyer and building him a new building on the land, then it is possible to structure this as two contracts. Thus SDLT is payable on the land sale element alone, since the building works are outside its scope;

postpone substantial performance: if ‘substantial performance’ can be deferred then so can the payment of SDLT. The difficulty is that as soon as the purchaser occupies, the contract will normally be substantially performed. But, there may be situations where it is possible to postpone the buyer taking possession of the whole site (eg when a developer takes possession of a site in stages so that this will not amount to substantial performance until virtually the whole site is occupied – provided that 90% of the purchase price is not paid until then);

joint venture: a developer may be able to take advantage of the rule that building works carried out on land in which the buyer obtains a major interest do not count as chargeable consideration. Suppose the developer buys an undivided share in the site (eg 60%). The consideration will be – as much as possible – an obligation to build the development, plus also whatever cash the seller requires. The cash is chargeable consideration for SDLT. But, the value of the building works is excluded. Once the development is completed then the units are sold and the proceeds divided between seller and developer as co-owners. Whilst this works from an SDLT point of view, it does require the seller to sell an undivided share and participate in the joint venture. Any profits will be chargeable to IT in the hands of the seller (and not CGT).

There are no simple solutions. For an excellent starting point see Stamp Duty Land Tax (Michael Thomas, 2nd edition, Cambridge £85). © Practical Lawyer