Assuming the property is used or suitable for use as a dwelling, it will be subject to SDLT at the residential rates. FA 2003 s116. The residential rates can be found here. Acquisitions of dwellings by companies are always subject to the higher residential rate i.e. the additional 3% on top of the residential rates. FA 2003 Sch. 4ZA para 4
However, as the property is valued in excess of £500,000, the company will need to consider the flat 15% rate applied to residential property acquisitions by non-natural persons. FA 2003 s4A. Relief from the 15% rate is available if the company is used for a qualifying purpose within FA 2003 Sch. 4A para 5. For example, if the property is rented out in the course of a qualifying property rental business on a commercial basis and no non qualifying individual is permitted to occupy the property, the company will be able to claim relief from 15% rate. The client must also be aware that there is a withdrawal of relief, if within 3 years of the transaction, the dwelling ceases to be used for any of the qualifying purposes or a non-qualifying individual is permitted to occupy the dwelling.
In addition, the company will also need to consider the non-resident surcharge of 2%, the rules of which are independent of the other rates and will therefore be applied in addition to the other rates. Although, it may appear to not be relevant as the purchase is by a UK company, the definition of non-UK resident for the purposes of the surcharge will need to be considered. The definition of non-UK resident for a company is within FA 2003 Sch. 9A Part 4. There are 2 conditions within paragraph 7 and if either are met the company will be treated as non-resident.
The first condition is that the company is treated as non-UK resident for the purposes of the Corporation Tax Acts. Here the company is incorporated in the UK and is therefore UK resident. CTA 2009 s14. Certain companies although incorporated in the UK, may be non-UK resident by virtue of CTA 2009 s18, which treats UK companies that are non-UK resident for the purposes of a double taxation agreement as non-UK resident for the purposes of the Corporation Tax Acts. There is, however, no double tax agreement with Cuba and therefore the company is considered UK resident for Corporation Tax Purposes and this first condition will not be satisfied.
The second condition is that the company is a close company, which is not an excluded company and meets the non-UK control test in relation to the transaction. The meaning of close company is taken from CTA 2010 Part 10 Chapter 2 subject to two modifications, neither of which are relevant in this scenario but can be found in FA 2003 Sch. 9A para 8. A close company is one which is under the control of five or fewer participators or any number of participators who are also directors. Clearly here the company is under the control of one participator and will therefore be considered close.
It will then need to be considered whether the non-UK control test is met. FA 2003 Sch. 9A para 9. This test will be met if again it is under the control of any number participators who are themselves non-residents for the purposes of the surcharge or any number of such participators who are also directors. To confirm this test is met, it will need to be established whether the director would be non-resident for the purposes of the surcharge. The client will be considered UK resident if within the 364 days before and 365 days after the transaction, the individual is present in the UK on at least 183 days. You mention the director permanently resides in Cuba so assuming he does not come to the UK, he will be considered non-UK resident in relation to the transaction. This then meets the non-UK control test will be met. Assuming the company is not an excluded company under FA 2003 Sch. 9A para 11, the company will have met the second condition and will be considered non-UK resident for the purposes of the surcharge. This then means that the company will suffer an additional 2% on top of the other rates applied to the transaction.
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