Finance (No. 2) Bill

Session 2012 - 13
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Finance (No. 2) Bill

Finance (No. 2) Bill
Part 3 — Annual tax on enveloped dwellings
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(a)
a person carrying on a property development trade (“the property
developer”) is entitled to a single-dwelling interest that has been
acquired in the course of that trade (whether or not the acquisition was
part of a qualifying exchange for the purposes of section 137), and
(b)
a non-qualifying individual is permitted to occupy the dwelling.
5
(2)
No subsequent day is relievable in the case of the single-dwelling interest by
virtue of section 136(1) or 137(1) if—
(a)
the day falls within that chargeable period, or any of the subsequent 3
chargeable periods, and
(b)
there is continuity of ownership on that day.
10
(3)
There is “continuity of ownership” on any day on which—
(a)
the property developer is entitled to the single-dwelling interest, or
(b)
if the property developer carried on the property development trade in
partnership, another member of the partnership is entitled to the
interest.
15
(4)
Subsection (5) applies if—
(a)
on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and
(b)
on an earlier day in that, or the preceding, chargeable period (“the
20
earlier day”) the conditions in section 136(1)(a) and (b) are met in
relation to the same single-dwelling interest.
(5)
The earlier day is not relievable by virtue of section 136(1) in the case of the
single-dwelling interest if—
(a)
a person who is entitled to the interest on the earlier day is also entitled
25
to it on the day of non-qualifying occupation, or
(b)
if the trade mentioned in section 136(1) is carried on in partnership, a
person who has at any time carried that business on in partnership is
entitled to the interest on the day of non-qualifying ownership.
(6)
Subsection (7) applies if—
30
(a)
on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and
(b)
on an earlier day in that, or the preceding, chargeable period (“the
earlier day”) the conditions in section 137(1)(a) and (b) are met in
35
relation to the same single-dwelling interest.
(7)
The earlier day is not relievable by virtue of section 137(1) in the case of the
single-dwelling interest if—
(a)
a person who is entitled to the interest on the earlier day is also entitled
to it on the day of non-qualifying occupation, or
40
(b)
where the trade mentioned in section 137(1) is carried on in
partnership, a person who has at any time carried that business on in
partnership is entitled to the interest on the day of non-qualifying
ownership.
(8)
If a day that is relievable by virtue of section 131(1)(a) falls between the earlier
45
day mentioned in subsection (5) or (as the case may be) (7) and the day of non-
qualifying occupation, that subsection does not apply in relation to that earlier
day.

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(9)
For the purposes of sections 136 and 137 and this section—
(a)
“non-qualifying individual” has the meaning given by section 134(1);
(b)
occupation of any part of a dwelling is regarded as occupation of the
dwelling.
139
Property traders
5
(1)
A day in a chargeable period is relievable in relation to a single-dwelling
interest if on that day—
(a)
a person carrying on a property trading business is entitled to the
interest, and
(b)
the interest is held as stock of the business and for the sole purpose of
10
resale in the course of the business.
(2)
A single-dwelling interest in a dwelling is taken not to be held for the sole
purpose of resale in the course of a property trading business at any time when
a non-qualifying individual is permitted to occupy the dwelling.
(3)
In this Part “property trading business” means a business that—
15
(a)
consists of or includes activities in the nature of a trade of buying and
selling dwellings, and
(b)
is carried on on a commercial basis and with a view to profit.
140
Property traders: supplementary
(1)
Subsection (2) applies if on a day in a chargeable period (“the day of non-
20
qualifying occupation”)—
(a)
a person carrying on a property trading business (“the property
trader”) is entitled to a single-dwelling interest that is held as
mentioned in section 139(1)(b), and
(b)
a non-qualifying individual is permitted to occupy the dwelling.
25
(2)
No subsequent day is relievable in the case of the single-dwelling interest by
virtue of section 139(1) if—
(a)
the day falls within that chargeable period, or any of the subsequent 3
chargeable periods, and
(b)
the property trader or a relevant partner was entitled to the interest on
30
that day.
(3)
If on the day of non-qualifying occupation mentioned in subsection (1) the
property trader carries on the property trading business in partnership,
“relevant partner” means any other person who is, at any time, a member of
that partnership.
35
(4)
Subsection (5) applies if—
(a)
on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and
(b)
on an earlier day in that, or the preceding, chargeable period (“the
40
earlier day”) the conditions in section 139(1)(a) and (b) are met in
relation to the same single-dwelling interest.
(5)
The earlier day is not relievable by virtue of section 139(1) in the case of the
single-dwelling interest if—

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(a)
a person who is entitled to the interest on the earlier day is also entitled
to it on the day of non-qualifying occupation, or
(b)
if the business mentioned in section 139(1) is carried on in partnership,
a person who has at any time carried that business on in partnership is
entitled to the interest on the day of non-qualifying ownership.
5
(6)
Subsection (5) does not apply in relation to the earlier day if a day that is
relievable by virtue of section 131(1)(a) falls between the earlier day and the
day of non-qualifying occupation.
(7)
For the purposes of this section and section 139—
(a)
“non-qualifying individual” has the meaning given by section 134(1);
10
(b)
occupation of any part of a dwelling is regarded as occupation of the
dwelling.
141
Financial institutions acquiring dwellings in the course of lending
(1)
A day in a chargeable period is relievable in relation to a single-dwelling
interest if matters stand as follows on that day—
15
(a)
a financial institution carrying on a business that involves the lending
of money is entitled to the interest,
(b)
the financial institution has acquired the interest in the course of that
business and in connection with those lending activities, and
(c)
the interest is held with the intention that it will be sold in the course of
20
that business without delay (except so far as delay is justified by
commercial considerations or cannot be avoided).
(2)
A single-dwelling interest in a dwelling is taken not to be held with the
intention mentioned in subsection (1)(c) at any time when a non-qualifying
individual is permitted to occupy the dwelling.
25
(3)
In this Part (except where otherwise stated) “financial institution” has the
meaning given by section 564B of ITA 2007; but for this purpose section 564B(1)
is to be read as if paragraph (d) of that subsection were omitted.
142
Section 141: supplementary
(1)
Subsection (2) applies if on a day in a chargeable period—
30
(a)
a financial institution that carries on a business involving the lending of
money is entitled to a single-dwelling interest that has been acquired by
it as mentioned in section 141(1)(b), and
(b)
a non-qualifying individual is permitted to occupy the dwelling.
(2)
No subsequent day is relievable in the case of the single-dwelling interest by
35
virtue of section 141(1) if—
(a)
the day falls within that chargeable period, or any of the subsequent 3
chargeable periods, and
(b)
there is continuity of ownership on that day.
(3)
There is continuity of ownership on a day on which—
40
(a)
the financial institution is entitled to the single-dwelling interest, or
(b)
if the financial institution carried on the business mentioned in
subsection (1)(a) in partnership, another member of the partnership is
entitled to the interest.

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(4)
Subsection (5) applies if—
(a)
on a day in a chargeable period (“the day of non-qualifying
occupation”) a person who is a non-qualifying individual in relation to
a single-dwelling interest is occupying the dwelling in question, and
(b)
on an earlier day in that, or the preceding, chargeable period (“the
5
earlier day”) the conditions in section 141(1)(a) to (c) are met in relation
to the same single-dwelling interest.
(5)
The earlier day is not relievable by virtue of section 141(1) in the case of the
single-dwelling interest if—
(a)
a person who is entitled to the interest on the earlier day is also entitled
10
to it on the day of non-qualifying occupation, or
(b)
if the business mentioned in section 141(1) is carried on in partnership,
a person who has at any time carried that business on in partnership is
entitled to the interest on the day of non-qualifying ownership.
(6)
Subsection (5) does not apply in relation to the earlier day if a day that is
15
relievable by virtue of section 131(1)(a) falls between the earlier day and the
day of non-qualifying occupation.
(7)
For the purposes of this section and section 141—
(a)
“non-qualifying individual” has the meaning given by section 134(1);
(b)
occupation of any part of a dwelling is regarded as occupation of the
20
dwelling.
143
Occupation by certain employees or partners
(1)
A day in a chargeable period is a relievable if matters stand as follows on that
day—
(a)
a person (“P”) is entitled to a single-dwelling interest,
25
(b)
P, or a relevant group member, carries on a qualifying trade,
(c)
the interest is held for the purpose of making the dwelling available to
one or more qualifying employees or qualifying partners for use as
living accommodation, and
(d)
the dwelling is, or is to be, made available as mentioned in paragraph
30
(c) for purposes that are solely or mainly purposes of the trade.
(2)
“Qualifying trade” means a trade that is carried on on a commercial basis and
with a view to profit.
(3)
In this section references to making a dwelling available to a qualifying
employee or qualifying partner include making it available to persons who are
35
to share the accommodation with such an individual as their family.
(4)
Where P is a company, “a relevant group member” means a company which is
a member of the same group as P for the purposes mentioned in paragraph 1(2)
of Schedule 7 to FA 2003 (stamp duty land tax: group relief).
144
Meaning of “qualifying employee” and “qualifying partner” in section 143
40
(1)
In a case where the person carrying on the trade mentioned in section 143(1)(b)
carries it on in partnership with one or more other persons, “qualifying
partner” means any individual who is a member of the partnership, except one
who is entitled to a 10% or greater share—
(a)
in the income profits of the partnership, or
45

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(b)
in any company that is entitled to the single-dwelling interest
mentioned in section 143(1)(a), or
(c)
in the partnership’s assets.
(2)
“Qualifying employee” means any individual employed for the purposes of
the qualifying trade, except one who—
5
(a)
is entitled to a 10% or greater share—
(i)
in the income profits of the trade, or
(ii)
in any company that is entitled to the single-dwelling interest
mentioned in section 143(1)(a), or
(iii)
in that single-dwelling interest, or
10
(b)
provides excluded domestic services.
(3)
The reference in subsection (2)(b) to an individual who provides excluded
domestic services is to an individual the duties of whose employment include
the provision of services in connection with the (actual or intended)
occupation, by a non-qualifying individual, of the dwelling mentioned in
15
section 143(1)(b) (“the relevant dwelling”), or a linked dwelling.
(4)
In subsection (3) “non-qualifying individual” means an individual connected
with a person who is entitled to the single-dwelling interest.
(5)
The following are “linked” dwellings for the purposes of subsection (3)—
(a)
if the conditions in section 114(2) are met in relation to the relevant
20
dwelling and another dwelling, that other dwelling;
(b)
a dwelling that is linked to the relevant dwelling, as described in
section 115(1).
(6)
In this section references to employment include the holding of an office.
(7)
For the purposes of subsections (1)(c) and (2)(a)(iii) persons who are entitled to
25
a chargeable interest as beneficial joint tenants (or, in Scotland, as joint owners)
are taken to be entitled to the chargeable interest as beneficial tenants in
common (or, in Scotland, as owners in common) in equal shares.
145
Meaning of “10% or greater share in a company”
(1)
This section applies for the purposes of section 144.
30
(2)
An individual (“P”) is taken to be entitled to a 10% or greater share in a
company (“C”) if P possesses (directly or indirectly) or is entitled to acquire—
(a)
10% or more of the share capital of C,
(b)
10% or more of the issued share capital of C,
(c)
10% or more of the voting power in C,
35
(d)
so much of the issued share capital of C as would, on the assumption
that the whole of the income of C were distributed among the
participators, entitle P to receive 10% or more of the amount so
distributed, or
(e)
such rights as would entitle P, in the event of the winding up of C or in
40
any other circumstances, to receive 10% or more of the assets of C
which would then be available for distribution among the
participators.
(3)
Any rights that P or any other person has as a loan creditor are to be
disregarded for the purposes of the assumption in subsection (2)(d).
45

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(4)
For the purposes of subsection (2) a person is treated as entitled to acquire
anything which the person—
(a)
is entitled to acquire at a future date, or
(b)
will at a future date be entitled to acquire.
(5)
If a person—
5
(a)
possesses any rights or powers on behalf of another person (“A”), or
(b)
may be required to exercise any rights or powers on A’s direction or
behalf,

those rights or powers are to be attributed to A.
(6)
The following are also to be attributed to a person—
10
(a)
the rights and powers of any company of which the person has, or the
person and associates of the person have, control;
(b)
the rights and powers of any two or more companies within paragraph
(a);
(c)
the rights and powers of any associate of the person (or of any two or
15
more associates of the person).
(7)
The rights and powers which are to be attributed under subsection (6)—
(a)
include those attributed to a company or associate under subsection (5),
but
(b)
do not include those attributed to an associate under subsection (6).
20
(8)
A person who does not meet the conditions in subsection (2) is nevertheless
treated as having a 10% or greater share in a company if the person exercises,
is able to exercise or is entitled to acquire, direct or indirect control over the
company’s affairs.
(9)
In this section—
25
“associate” has the same meaning as in Part 10 of CTA 2010 (see section
448 of that Act); but for this purpose section 448 is to be read as if the
words “or partner” were omitted in subsection (1)(a);
“control” has the same meaning as in that Part (see section 450 of that Act);
“loan creditor” has the same meaning as in that Part (see section 453 of
30
that Act);
“participator” has the same meaning as in that Part (see section 454 of that
Act).
146
Farmhouses
(1)
This section applies where on a day in a chargeable period—
35
(a)
a dwelling (“the farmhouse”) forms part of land occupied for the
purposes of a qualifying trade of farming, and
(b)
a person carrying on the trade is entitled to, or connected with a person
who is entitled to, a single-dwelling interest in the farmhouse.
(2)
That day is relievable in relation to the single-dwelling interest if on that day
40
the farmhouse is occupied—
(a)
by a farm worker who occupies it for the purposes of the trade, or
(b)
by a former long-serving farm worker, or the surviving spouse or civil
partner of a former farm worker.
(3)
A trade of farming is a “qualifying trade of farming” only if it is carried on—
45

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(a)
on a commercial basis, and
(b)
with a view to profit.
(4)
In this section—
“farming” has the same meaning as in the Corporation Tax Acts (see
section 1125 of CTA 2010), except that in this section “farming” includes
5
market gardening;
“market gardening” has the same meaning as in the Corporation Tax Acts
(see section 1125(5) of CTA 2010).
147
“Farm worker” and “former long-serving farm worker”
(1)
An individual is a “farm worker” in relation to the qualifying trade of farming
10
mentioned in section 146(1) at any time when the individual has a substantial
involvement in—
(a)
the day-to-day work of the trade, or
(b)
the direction and control of the conduct of the trade.
(2)
Where section 146 applies, an individual occupying the farmhouse on the day
15
mentioned in section 146(1) is a “former long-serving farm worker” if the
individual had, before that day, been a farm worker in relation to the
qualifying trade of farming for—
(a)
a qualifying period of 3 or more years, or
(b)
qualifying periods together amounting to 3 or more years within a 5
20
year period.
(3)
In subsection (2) “qualifying period” means a period throughout which—
(a)
the individual occupied the farmhouse for the purposes of the trade,
(b)
the land of which the farmhouse forms part was occupied for the
purposes of the trade,
25
(c)
the trade was carried on by—
(i)
a person who is entitled to the single-dwelling interest in the
farmhouse on the day mentioned in section 146(1), or
(ii)
a person connected with such a person, and
(d)
a person who is entitled to the single-dwelling interest in the farmhouse
30
on the day mentioned in section 146(1) was entitled to that interest.
(4)
A person occupying part of a dwelling is regarded as occupying the dwelling
for the purposes of this section and section 146.
148
Charitable companies
(1)
A day in a chargeable period is relievable in relation to a single-dwelling
35
interest if on that day—
(a)
a charitable company is entitled to the interest, and
(b)
the interest is held by the charitable company for qualifying charitable
purposes.
(2)
The interest is “held for qualifying charitable purposes” if it is held—
40
(a)
for use in furtherance of the charitable purposes of the charitable
company or of another charity, or
(b)
as an investment from which the profits are (or are to be) applied to the
charitable purposes of the charitable company.