Finance (No. 2) Bill

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
442

CP is the total amount of consideration given by the party
for the acquisition of the chargeable interest or as
consideration for a pre-completion transaction;
CR is the total of any amounts of consideration given to the
party by another relevant party (or other relevant parties)
5
as consideration for the acquisition of the chargeable
interest or as consideration for a pre-completion
transaction.

If CR is greater than CP, the net amount of consideration given by
the relevant party is taken to be zero.
10
      (3)
Except where sub-paragraph (4) applies, the relevant parties for
the purposes of this paragraph are—
(a)
the original purchaser, and
(b)
the transferee.
      (4)
If the pre-completion transaction referred to in paragraph 4(4) or
15
9(2) (“the implemented transaction”) is one in a chain of successive
transactions (having at least part of their subject-matter in
common) that are pre-completion transactions in relation to the
original contract, only the following are relevant parties—
(a)
the persons who are the transferor and transferee in
20
relation to the implemented transaction;
(b)
a person who is the transferor in relation to preceding
transaction, if that person is connected with, or not acting
at arm’s length in relation to, the transferee under the
implemented transaction,
25
(c)
the transferee under a pre-completion transaction, if the
transferor is a relevant party (whether by virtue of this
paragraph (c) or otherwise).
      (5)
For the purposes of sub-paragraph (2)—
(a)
amounts given by a person connected with a relevant
30
party are treated as given by the relevant party;
(b)
amounts given to a person connected with a relevant party
are treated as given to the relevant party.

References in this paragraph to a person connected with a relevant
party do not include a person who is a relevant party.
35
      (6)
If the subject-matter of the implemented transaction is not the
whole subject-matter of the original contract—
(a)
the amounts that are taken for the purposes of sub-
paragraph (2) to be given “for the acquisition of the
chargeable interest” are to be determined on a just and
40
reasonable basis, and
(b)
only so much of the consideration for a preceding
transaction as is referable, on a just and reasonable
apportionment, to the subject-matter of the implemented
transaction is taken into account under sub-paragraph (2).
45
      (7)
In this paragraph—
(a)
references to “the original contract” are to be read in
accordance with paragraph 12(5) (and references to “the
original purchaser” are to be read accordingly);

Finance (No. 2) Bill
Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
443

(b)
“preceding transaction” means a pre-completion
transaction that precedes the implemented transaction in a
chain of successive pre-completion transactions (all having
at least part of their subject-matter in common).
Relief for original purchaser: assignment of rights
5
15    (1)
This paragraph applies where—
(a)
a person would, in the absence of this paragraph, be liable
to pay tax in respect of a notional land transaction deemed
to take place under paragraph 5(1) or an additional land
transaction deemed to take place under paragraph 5(2),
10
and
(b)
the original contract had not been substantially performed
when the assignment of rights mentioned in paragraph
4(1) was entered into.
      (2)
If the purchaser claims relief under this paragraph in respect of the
15
notional land transaction or additional land transaction, no
liability to tax arises in respect of that transaction.
      (3)
Sub-paragraph (2) does not apply if the land transaction
mentioned in paragraph 4(4) is exempt from charge by virtue of
any of sections 71A to 73 (which relate to alternative property
20
finance).
      (4)
Relief under this section must be claimed in a land transaction
return or an amendment of such a return.
Relief for original purchaser: qualifying subsales
16    (1)
This paragraph applies if—
25
(a)
the pre-completion transaction is a qualifying subsale,
(b)
the original purchaser would, in the absence of this
paragraph, be liable to pay tax in respect of a land
transaction effected by the completion of the original
contract or deemed to be effected by the substantial
30
performance of the original contract,
(c)
the performance of the qualifying subsale takes place at the
same time as, and in connection with, the performance of
the original contract, and
(d)
relief is claimed in respect of the land transaction
35
mentioned in paragraph (b).
      (2)
If the subject-matter of the qualifying subsale is the whole of the
subject-matter of the original contract, no liability to tax arises in
respect of the land transaction.
      (3)
If the subject-matter of the qualifying subsale is part (but not the
40
whole) of the subject-matter of the original contract, the amount of
the consideration for the land transaction is taken to be—
(a)
the amount that it would be apart from this subsection, less
(b)
so much of that amount as is referable to the subject-matter
of the qualifying subsale.
45

Finance (No. 2) Bill
Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
444

      (4)
The amount mentioned in sub-paragraph (3)(a) may be reduced
more than once under sub-paragraph (3) if there is more than one
qualifying subsale.
      (5)
Sub-paragraphs (2) to (4) do not apply if—
(a)
the original contract had been substantially performed
5
when the qualifying subsale was entered into, or
(b)
the transaction effected, or deemed to be effected, by the
performance of the qualifying subsale is exempt from
charge by virtue of any of sections 71A to 73.
      (6)
Relief under this section must be claimed in a land transaction
10
return or an amendment of a land transaction return.
      (7)
For the purposes of this paragraph a contract for a land transaction
is taken to be “performed” when it is substantially performed or
completed (whichever is earlier).
      (8)
A pre-completion transaction is a “qualifying subsale” if it is a
15
contract under which the original purchaser contracts to sell the
whole or part of the subject-matter of the original contract to the
transferee.
Application of paragraph 16 to successive subsales
17
If a transaction is a qualifying subsale in relation to more than one
20
contract such as is mentioned in paragraph 1(1)(a), paragraph 16
is to be applied separately in relation to each such original contract
for the purpose of determining what relief, if any, may be available
with respect to the land transaction in question.
Tax avoidance arrangements
25
18    (1)
Relief may not be claimed—
(a)
under paragraph 15 if the assignment of rights referred to
in sub-paragraph (1)(b) of that paragraph forms part of any
tax avoidance arrangements, or
(b)
under paragraph 16 if the qualifying subsale referred to in
30
sub-paragraph (1)(c) of that paragraph forms part of any
tax avoidance arrangements.
      (2)
Arrangements are “tax avoidance arrangements” if, having regard
to all the circumstances, it would be reasonable to conclude that
the obtaining of a tax advantage for the original purchaser or any
35
other person was the main purpose, or one of the main purposes,
of the original purchaser in entering into the arrangements.
      (3)
In this paragraph “tax advantage” means—
(a)
a relief from tax or increased relief from tax,
(b)
a repayment of tax or increased repayment of tax,
40
(c)
the avoidance or reduction of a charge to tax, or
(d)
the avoidance of a possible assessment to tax.
      (4)
In this paragraph “arrangements” includes any agreement,
understanding, scheme, transaction or series of transactions
(whether or not legally enforceable).
45

Finance (No. 2) Bill
Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
445

      (5)
Nothing in paragraphs 12 to 14 (minimum consideration rule) or
this paragraph affects the breadth of the application of sections
75A to 75C (anti-avoidance).
Exclusion of transactions from duty to make returns etc
19    (1)
The Treasury may by regulations amend this Schedule, or any
5
provision of this Part of this Act relating to the making of returns,
so as to—
(a)
exempt relevant purchasers of any specified description,
or in specified circumstances, from the duty to deliver a
land transaction return,
10
(b)
provide for relief under paragraph 15 or 16 to be available
without a claim in the case of any specified class of
transactions, or
(c)
provide that paragraph 5 does not apply in specified cases.
      (2)
In this paragraph “relevant purchaser” means a person who is the
15
transferor under a pre-completion transaction.
Connected persons
20
Section 1122 of CTA 2010 (connected persons) applies for the
purposes of this Schedule.
Interpretation of Schedule
20
21    (1)
In this Schedule—
“assignment of rights” has the meaning given by paragraph
2(1);
“contract” includes any agreement;
“conveyance” includes any instrument;
25
“free-standing transfer” has the meaning given by paragraph
2(2);
“pre-completion transaction” (in relation to a contract such as
is mentioned in paragraph 1(1)) has the meaning given by
paragraph 1(2);
30
“qualifying subsale” has the meaning given by paragraph
16(8);
“the transferee”, in relation to a pre-completion transaction,
has the meaning given by paragraph 1(2)(a);
“the transferor”, in relation to a pre-completion transaction,
35
has the meaning given by paragraph 2(3).
      (2)
In this Schedule—
(a)
references to “the original contract” are to be read in
accordance with paragraph 1(1)(a);
(b)
references to “the original purchaser” are to be read in
40
accordance with paragraph 1(1)(a) and see also sub-
paragraph (3);
(c)
references to “part of the subject-matter of the original
contract” are to be read in accordance with paragraph 1(7);

Finance (No. 2) Bill
Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
446

(d)
references to the “subject-matter” of a pre-completion
transaction are to be read in accordance with paragraph
2(4);
(e)
references to substantial performance of the original
contract “by the transferee” (in cases involving an
5
assignment of rights) are to be read in accordance with
paragraph 4(7).
      (3)
For any one contract for the acquisition of a chargeable interest
there is only one original purchaser (disregarding cases involving
joint purchasers).”
10
4
In section 57A (sale and leaseback arrangements), in subsection (3)(c)—
(a)
omit “section 45 (contract and conveyance: effect of transfer of rights)
or”, and
(b)
after the second occurrence of “transfer of rights)” insert “or a pre-
completion transaction within the meaning of Schedule 2A
15
(transactions entered into before completion of contract)”.
5
In section 77 (notifiable transactions), in subsection (1)—
(a)
omit the “or” after paragraph (c), and
(b)
after paragraph (d) insert, “or
(e)
a notional or additional land transaction under
20
paragraph 5 of Schedule 2A.”
6
In section 79(2) (registration of land transactions etc)—
(a)
omit paragraph (a)(i) and the “or” after it, and
(b)
after paragraph (b) insert—
“(ba)
under paragraph 5 of Schedule 2A (transactions
25
entered into before completion of contract),”.
7
In section 119 (meaning of “effective date” of a transaction), in subsection (2),
at the appropriate place insert—
“paragraph 5 of Schedule 2A,”.
8
In section 121 (index of defined expressions), in the entry for “vendor”, in the
30
second column, for “sections 45(5A) and 45A(9)” substitute “section 45A(9)
and paragraphs 8, 10 and 11 of Schedule 2A”.
9
In Schedule 6B (transfers involving multiple dwellings), in paragraph 7(6),
in the definition of “relevant deeming provision”, after “45A” insert “or
paragraph 5(1) or (3) of Schedule 2A”.
35
10
In paragraph 12B of Schedule 17A (assignment of agreement for lease), in
sub-paragraph (1) for “section 45 (contract and conveyance: effect of transfer
of rights)” substitute “Schedule 2A (transactions entered into before
completion of contract)”.
11
The amendments made by this Schedule have effect in relation to transfers
40
of rights (see section 45 of FA 2003) and pre-completion transactions (see
paragraph 3) entered into on or after the day on which this Act is passed.