SDLT and substantial performance?


#1

I would much appreciate any views on an SDLT issue that has arisen in the context of Will instructions.

A. has been residing in her home as sole legal and beneficial owner, subject to mortgage, since a parent’s death many years ago.
At that time, B. solely owned his now former matrimonial home, also subject to mortgage.
Following his divorce a few years ago, B let his own property and started cohabiting with A in her home
About a year ago, B paid £140,000 to A (or her lender) to secure a discharge of her mortgage. This represented 1/3rd of the estimated market value of A’s home.
The process required no legal advice and B made his payment and A accepted it on the mutual understanding that B would acquire a 1/3rd beneficial share in A’s home. Basic rights of occupation for B, pre-emption and maintenance share obligations were recorded, ad hoc without legal advice, which A & B planned to review on making Wills.
I have been consulted in relation to Wills but am concerned now by the SDLT implications of what A & B have done.
If B has completed an acquisition of an interest in land by substantial performance (ie the 140k payment) it seems there may have been (understandably unbeknownst to A or B) aliability to notify and pay stamp duty within 30 days of payment.
If this were so, B would be liable to pay SDLT at 1% (>125k) and 3% (second property). Any views on if that is indeed so and on the likelihood of penalties?

Mark Walker
Anglolex Ltd.