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Finance Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions

622

 

      (2)  

After subsection (1) insert—

“(1A)   

The rate of tax is determined as follows.

   

Step 1

   

Determine the fraction of the relevant consideration produced by

dividing the total amount of that consideration by the number of

5

qualifying flats contained in the premises.

   

Step 2

   

If the amount produced by step 1 is £2,000,000 or less, determine the

rate of tax and the tax chargeable in accordance with subsections (2)

and (3).

10

   

Step 3

   

If the amount produced by step 1 is more than £2,000,000 and the

condition in paragraph 3(3) of Schedule 4A is not met with respect to

the transaction, determine the rate of tax and the tax chargeable in

accordance with subsections (2) and (3).

15

   

Step 4

   

If the amount produced by step 1 is more than £2,000,000 and the

condition in paragraph 3(3) of Schedule 4A is met with respect to the

transaction, subsections (2) and (3) do not apply, and the amount of

tax chargeable in respect of the transaction is 15% of the chargeable

20

consideration for the transaction.”

      (3)  

For subsection (2) substitute—

“(2)   

The rate of tax is determined under section 55 by reference to the

fraction of the relevant consideration calculated under step 1 of

subsection (1A).”

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Minor and consequential amendments

6     (1)  

Section 109 (general power to vary Part 4 of FA 2003 by regulations) is

amended as follows.

      (2)  

After subsection (2) insert—

“(2A)   

The power under subsection (2)(b) includes power to alter the

30

conditions for the application to a chargeable transaction of

paragraph 3 of Schedule 4A (higher rate for certain transactions),

other than the condition that the transaction must be a high-value

residential transaction.”

      (3)  

In subsection (3)—

35

(a)   

for “subsection (2)(b),” substitute “subsections (2)(b) and (2A),”,

(b)   

omit the “or” at the end of paragraph (a), and

(c)   

after that paragraph insert—

“(aa)   

section 74(1A) (exercise of collective rights by tenants

of flats),

40

(ab)   

Schedule 4A (amount of tax chargeable: high-value

interests in dwellings), or”.

7     (1)  

Schedule 5 (amount of tax chargeable: rent) is amended as follows.

      (2)  

In paragraph 9—

 
 

Finance Bill
Schedule 34 — Stamp duty land tax: higher rate for certain transactions

623

 

(a)   

in sub-paragraph (4)—

(i)   

after “section 55” insert “or 74(1A)”, and

(ii)   

after “Schedule” (in the second place it occurs) insert “4A or”,

and

(b)   

in sub-paragraph (5)—

5

(i)   

for “that section” substitute “section 55”, and

(ii)   

after “Schedule” (in the second place it occurs) insert “6B”.

      (3)  

In paragraph 9A(1), for “where there is chargeable consideration other than

rent.” substitute “where—

(a)   

there is chargeable consideration other than rent, and

10

(b)   

section 55 (amount of tax chargeable: general) applies to

the transaction (whether as a result of paragraph 2 of

Schedule 4A or otherwise).”

8          

In paragraph 2(4) of Schedule 6B (transfers involving multiple dwellings)—

(a)   

omit the “or” at the end of paragraph (a), and

15

(b)   

after that paragraph insert—

“(aa)   

paragraph 3 of Schedule 4A applies to it, or”.

9     (1)  

Schedule 15 (partnerships) is amended as follows.

      (2)  

In paragraphs 11(2C) and 19(2C), in the substituted sub-paragraph (4)—

(a)   

after “section 55” insert “or 74(1A)”, and

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(b)   

after “Schedule” (in the second place it occurs) insert “4A or”.

      (3)  

In paragraph 30(2)—

(a)   

for “either or both” substitute “one or more”, and

(b)   

after paragraph (a) insert—

“(aa)   

paragraph 3 of Schedule 4A applies to the

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transaction;”.

Application of amendments

10    (1)  

Except as mentioned in sub-paragraph (2), the amendments made by this

Schedule have effect in relation to any land transaction of which the effective

date is on or after 21 March 2012.

30

      (2)  

Those amendments do not have effect in relation to any transaction that is—

(a)   

effected in pursuance of a contract entered into and substantially

performed before 21 March 2012,

(b)   

effected in pursuance of a contract entered into before that date and

not excluded by sub-paragraph (3), or

35

(c)   

excepted by sub-paragraph (4).

      (3)  

A transaction effected in pursuance of a contract entered into before 21

March 2012 is excluded by this sub-paragraph if—

(a)   

there is any variation of the contract, or assignment (or assignation)

of rights under the contract, on or after 21 March 2012,

40

(b)   

the transaction is effected in consequence of the exercise on or after

that date of any option, right of pre-emption or similar right, or

(c)   

on or after that date there is an assignment (or assignation), subsale

or other transaction relating to the whole or part of the subject-matter

 
 

Finance Bill
Schedule 35 — Agreement between UK and Switzerland
Part 2 — The past

624

 

of the contract as a result of which a person other than the purchaser

under the contract becomes entitled to call for a conveyance.

      (4)  

A transaction treated as occurring under paragraph 17(2) or 17A(4) of

Schedule 15 to FA 2003 (partnerships) is excepted by this sub-paragraph if

the effective date of the land transfer referred to in sub-paragraph (1)(a) of

5

the paragraph concerned is before 21 March 2012.

Schedule 35

Section 216

 

Agreement between UK and Switzerland

Part 1

Introduction

10

The Agreement and the Joint Declaration

1          

In this Schedule—

(a)   

“the Agreement” means the agreement signed on 6 October 2011

between the United Kingdom and the Swiss Confederation on co-

operation in the area of taxation, as amended by a protocol signed by

15

them on 20 March 2012,

(b)   

“the Joint Declaration” means the joint declaration (concerning a tax

finality payment) forming an integral part of that protocol,

(c)   

“the start date” is the date on which the Agreement enters into force

in accordance with its terms (see Article 44), and

20

(d)   

references to a numbered Article are to the Article of that number in

the Agreement.

Part 2

The past

Taxes affected

25

2     (1)  

The taxes affected by this Part are—

(a)   

income tax,

(b)   

capital gains tax,

(c)   

inheritance tax, and

(d)   

VAT.

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      (2)  

Accordingly, this Part affects—

(a)   

amounts of income on which income tax is charged,

(b)   

chargeable gains,

(c)   

the value of property forming part of the value transferred by a

chargeable transfer, and

35

(d)   

the value of supplies on which VAT is charged.

      (3)  

An amount falling within one (or more) of those descriptions is referred to

as a “taxable amount” and, in relation to such an amount, “tax” means

 
 

Finance Bill
Schedule 35 — Agreement between UK and Switzerland
Part 2 — The past

625

 

whichever of the taxes mentioned in sub-paragraph (1) is (or are) charged on

it.

Application of this Part

3     (1)  

This Part applies if—

(a)   

a one-off payment is levied in accordance with Part 2 of the

5

Agreement,

(b)   

a certificate is issued under Article 9(4) to a person (“P”) in respect of

that payment, and

(c)   

the certificate is approved by P or considered approved by virtue of

that Article.

10

      (2)  

The certificate is referred to in this Part as “the Part 2 certificate”.

Qualifying amounts

4     (1)  

The Part 2 certificate applies to taxable amounts in respect of which the

conditions in sub-paragraph (2) are met.

      (2)  

The conditions are—

15

(a)   

P is liable to tax on the amount,

(b)   

the amount is untaxed,

(c)   

the taxable event took place before the start date, and

(d)   

the necessary link with the certificate can be demonstrated.

      (3)  

The necessary link is—

20

(a)   

in a case falling within Article 9(3) (non-UK domiciled individuals

opting for self-assessment method), that the amount is included in

the omitted taxable base by reference to which the one-off payment

was calculated, and

(b)   

in any other case, that the amount forms part of or is represented by

25

the assets comprised in the relevant capital by reference to which the

one-off payment was calculated (referred to in the Agreement as Cr).

      (4)  

For the purposes of sub-paragraph (3)(b), amounts are assumed to be

attributed to assets in the way that produces the most beneficial outcome for

P.

30

      (5)  

Paragraph 11 makes further provision about the interpretation of sub-

paragraph (2).

      (6)  

Amounts to which the Part 2 certificate applies in accordance with this

paragraph are referred to in this Part as “qualifying amounts”.

Eligibility for clearance

35

5     (1)  

The effect of the Part 2 certificate depends on whether P is eligible for

clearance.

      (2)  

P is “eligible for clearance” if—

(a)   

none of the circumstances listed in Article 9(13)(a) to (e) apply (tax

investigations etc), and

40

(b)   

Article 12(1) does not apply (wrongful behaviour in relation to non-

UK domiciled status).

 
 

Finance Bill
Schedule 35 — Agreement between UK and Switzerland
Part 2 — The past

626

 

      (3)  

Otherwise, P is “not eligible for clearance”.

Effect if P eligible for clearance

6     (1)  

This paragraph sets out the effect of the Part 2 certificate if P is eligible for

clearance.

      (2)  

P ceases to be liable to tax on qualifying amounts.

5

      (3)  

Sub-paragraph (2) does not apply to a qualifying amount if—

(a)   

the amount was held in the United Kingdom,

(b)   

at some point during the period beginning with 6 October 2011 and

ending immediately before the start date, it ceased to be held in the

United Kingdom, and

10

(c)   

after that point (but before the start date) it began to be held in

Switzerland.

      (4)  

Instead, such part of the one-off payment as is attributable (on a just and

reasonable basis) to the qualifying amount is to be treated as if it were a

credit allowable against the tax due from P taking account of that amount.

15

      (5)  

The meaning of tax due “taking account of” an amount is explained in Part

5 of this Schedule.

      (6)  

The form in which a qualifying amount was held in the United Kingdom is

irrelevant (so references in sub-paragraph (3) to the amount include an asset

representing the amount).

20

      (7)  

The total qualifying amounts to which sub-paragraphs (2) and (4) can apply

as a result of the Part 2 certificate is limited to X.

      (8)  

If the total exceeds X, the particular qualifying amounts to which those sub-

paragraphs apply are assumed to be those that would produce the most

beneficial outcome for P.

25

      (9)  

X is—

(a)   

in a case falling within Article 9(3), the value of the omitted taxable

base by reference to which the one-off payment was calculated, and

(b)   

in any other case, the value shown in the Part 2 certificate as the value

of the relevant capital (Cr).

30

Ceasing to be liable to tax

7     (1)  

The result of “ceasing to be liable” to tax on a qualifying amount depends on

the tax (or taxes) in respect of which the amount is untaxed.

      (2)  

For income tax or capital gains tax, the result is that the amount is no longer

liable to be brought into account in assessing the income tax or capital gains

35

tax due from P for the tax year in which the amount would otherwise be

liable to be brought into account.

      (3)  

For inheritance tax, the result is that any inheritance tax due from P in

respect of the chargeable transfer and attributable to the property whose

value is included in the amount is no longer due from P.

40

      (4)  

For VAT, the result is that P is no longer required to account for output tax

on the amount in determining the VAT payable by P for the prescribed

 
 

Finance Bill
Schedule 35 — Agreement between UK and Switzerland
Part 2 — The past

627

 

accounting period in which P would otherwise be required to account for

output tax on the amount.

      (5)  

But—

(a)   

ceasing to be liable to tax on a qualifying amount does not affect P’s

liability to tax on any other amount, and

5

(b)   

P’s liability to tax on any other amount remains what it would have

been, had the qualifying amount been brought into account in

calculating that liability.

      (6)  

Accordingly, if the qualifying amount were ever to be brought into account

and it were found that the tax assessed on any other amount should have

10

been higher as a result, P would remain liable for the extra tax due on that

other amount and for any associated ancillary charge.

      (7)  

For the purposes of sub-paragraphs (5) and (6), the qualifying amount is

assumed to form the top slice of the total sum on which P is liable to tax.

Effect if P not eligible for clearance

15

8     (1)  

This paragraph sets out the effect of the Part 2 certificate if P is not eligible

for clearance.

      (2)  

The one-off payment is to be treated as if it were a credit allowable against

the tax due from P taking account of qualifying amounts.

      (3)  

The one-off payment is to be applied for the purposes of sub-paragraph

20

(2)—

(a)   

in the order specified in sub-paragraph (4), and

(b)   

subject to that, in the way that produces the most beneficial outcome

for P.

      (4)  

The order is—

25

(a)   

first, for VAT,

(b)   

then, for income tax,

(c)   

then, for capital gains tax, and

(d)   

finally, for inheritance tax.

Interest, penalties etc

30

9     (1)  

Where, by virtue of this Part, P ceases to be liable to tax on a qualifying

amount, P also ceases to be liable to any ancillary charge directly connected

with that amount.

      (2)  

Where, by virtue of this Part, all or part of a one-off payment is treated as if

it were a credit allowable against the tax due from P taking account of a

35

qualifying amount, the credit may also be used to offset any ancillary charge

directly connected with that amount.

      (3)  

Sub-paragraph (4) applies in the case of a qualifying amount that is part only

of—

(a)   

an amount of income on which income tax is charged,

40

(b)   

a chargeable gain,

(c)   

the value of property forming part of the value transferred by a

chargeable transfer, or

(d)   

the value of a supply on which VAT is charged.

 
 

Finance Bill
Schedule 35 — Agreement between UK and Switzerland
Part 2 — The past

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      (4)  

The amount of any ancillary charge directly connected with that qualifying

amount is determined by apportioning the ancillary charge directly

connected with the income, gain or value on a just and reasonable basis.

Repayments

10         

Nothing in this Part entitles any person to a repayment or refund of tax, save

5

for any repayment or refund to which P may be entitled by virtue of

paragraph 6(4) or 8(2) if the credit allowable under that paragraph exceeds

the total amount of tax against which the credit is allowable.

Paragraph 4: supplementary provision

11    (1)  

This paragraph explains how paragraph 4(2) is to be read for each

10

description of taxable amount.

      (2)  

For income and chargeable gains—

(a)   

the reference to P being “liable to tax” includes a case where P would

be so liable if the income or gain were to be remitted to the United

Kingdom,

15

(b)   

“the taxable event” takes place when the income arises or the gain

accrues (whether or not, in a remittance basis case, it is remitted to

the United Kingdom), and

(c)   

the income or gain is “untaxed” if it has not been brought into

account in an assessment to income tax or, as the case may be, capital

20

gains tax for the tax year in which it is required to be brought into

account.

      (3)  

For the value of property forming part of the value transferred by a

chargeable transfer—

(a)   

“the taxable event” takes place when the chargeable transfer is made

25

(or, in the case of a potentially exempt transfer, when death occurs),

and

(b)   

the value of the property is “untaxed” if it has not been brought into

account in determining the value transferred by the chargeable

transfer.

30

      (4)  

For the value of supplies on which VAT is charged—

(a)   

“the taxable event” takes place when P makes the supply, and

(b)   

the value of the supply is “untaxed” if output tax on the supply has

not been accounted for in determining the VAT payable by P for the

prescribed accounting period in which P is required to account for

35

output tax on the supply.

      (5)  

Paragraph 4(2)(a) is not satisfied in a case where P is liable to tax only

because the liability has been transferred to P as a result of action taken by

HMRC (for example, as a result of a notice given under section 77A of VATA

1994 or a direction given under regulation 81 of the Income Tax (PAYE)

40

Regulations 2003 (S.I. 2003/2682)).

Refund of one-off payment

12         

If a one-off payment is refunded by HMRC in accordance with Article 15(3),

this Part ceases to apply with respect to that payment.

 
 

 
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