Which scenario might attract HMRC scrutiny under SDLT rules?

Which scenario might attract HMRC scrutiny under SDLT rules?

• A. The chattels list is attached
• B. The sale price reflects market value
• C. The sale price is reduced to lower SDLT
• D. The contract includes standard conditions

Answer: (C)

SDLT is charged on the consideration for land, but HMRC watches for arrangements where the stated price doesn’t reflect the true value. If the sale price is deliberately reduced to lower the SDLT, it signals an attempt to avoid tax rather than a genuine bargain. In such cases HMRC can challenge the transaction and may assess using the true market value or reallocate part of the price to chattels, which can push the tax up. So the scenario where the price is reduced to lower SDLT is the one that would attract HMRC scrutiny. Attaching a chattels list, a price that reflects market value, or standard contract conditions aren’t, in themselves, indicative of avoidance.

SDLT is charged on the consideration for land, but HMRC watches for arrangements where the stated price doesn’t reflect the true value. If the sale price is deliberately reduced to lower the SDLT, it signals an attempt to avoid tax rather than a genuine bargain. In such cases HMRC can challenge the transaction and may assess using the true market value or reallocate part of the price to chattels, which can push the tax up. So the scenario where the price is reduced to lower SDLT is the one that would attract HMRC scrutiny. Attaching a chattels list, a price that reflects market value, or standard contract conditions aren’t, in themselves, indicative of avoidance.