Finance Bill

Session 2013 - 14
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Finance Bill
Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
435

(c)
a person connected with a person falling within
paragraph (a) or (b);

B is the total amount of any other consideration in money or
money’s worth given as consideration under the original contract
(directly or indirectly) by—
5
(a)
the purchaser (under the notional land transaction or,
as the case requires, the additional land transaction),
or
(b)
a person connected with the purchaser;

C is the amount of any consideration in money or money’s worth
10
given for the preceding assignment of rights by—
(a)
the purchaser (under the additional land transaction),
or
(b)
a person connected with the purchaser.
      (6)
In the definition of amount C, “the preceding assignment of
15
rights” means the assignment of rights as a result of which the
purchaser became entitled to call for a conveyance of (what
became) the subject-matter of the assignment of rights associated
with the additional land transaction.
      (7)
In sub-paragraph (2) “related assignment of rights” means a
20
transaction that is an assignment of rights in relation to the
original contract and has some subject-matter in common with the
implemented assignment of rights.
Paragraph 5: effect of rescission etc following substantial performance
6     (1)
This paragraph applies where paragraph 5(1) (transferor treated
25
as making separate acquisition) applies by virtue of the substantial
performance by the transferee of the original contract.
      (2)
If the original contract is (to any extent) subsequently rescinded or
annulled, or is for any other reason not carried into effect, the tax
paid by virtue of paragraph 5(1), and any tax paid by virtue of
30
paragraph 5(2), must (to that extent) be repaid by HMRC.
      (3)
Repayment under sub-paragraph (2) must be claimed by
amendment of the land transaction return made in respect of the
notional or additional land transaction.
Assignment of rights relating to part only of subject-matter of original contract
35
7
Where the transferee under the assignment of rights referred to in
paragraph 4(1) is entitled to call for the conveyance of part, but not
the whole, of the subject-matter of the original contract—
(a)
paragraph 4 applies as if the original contract, so far as
relating to that part of its subject-matter, were a separate
40
contract, and
(b)
the references in paragraph 5 to the original contract are to
be read accordingly.
Assignment of rights: references to “the vendor”
8     (1)
This paragraph applies where—
45

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Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
436

(a)
the pre-completion transaction is an assignment of rights,
and
(b)
either the subject-matter of the original contract is
conveyed to the transferee or the original contract is
substantially performed by the transferee.
5
      (2)
This paragraph does not apply if the original contract is itself a
free-standing transfer.

See paragraphs 10 and 11 for the treatment of such cases.
      (3)
In relation to a relevant land transaction, the general rule is that
references in this Part of this Act to the vendor are to be read as
10
references to the vendor under the original contract (but see sub-
paragraphs (4) and (5)).
      (4)
In cases where the original contract was substantially performed
before the transferee became entitled to call for a conveyance of
the whole or part of the subject-matter of the original contract,
15
references in this Part of this Act to the vendor are to be read as
references to the person who was the purchaser under the original
contract when it was substantially performed.
      (5)
In relation to a relevant land transaction, references to the vendor
in the specified provisions (see sub-paragraph (6)) are to be read
20
as including—
(a)
the vendor under the original contract, and
(b)
the transferor under any relevant assignment of rights.
      (6)
The specified provisions are—
(a)
section 61(1)(a) (compliance with planning obligations:
25
conditions for exemption);
(b)
section 66(1) and (2) (transfers involving public bodies);
(c)
paragraph 8(1)(a) of Schedule 4 (debt as consideration);
(d)
paragraph 10(2)(c) of Schedule 4 (carrying out of works);
(e)
paragraph 16 of Schedule 4 (indemnity given by vendor).
30
      (7)
The following are “relevant land transactions”—
(a)
the land transaction effected by the conveyance mentioned
in sub-paragraph (1)(b) or treated as effected by the
substantial performance mentioned in that provision;
(b)
the notional land transaction mentioned in paragraph
35
5(1)(b) and any additional land transaction under
paragraph 5(2).
      (8)
In determining under section 108(1) whether or not a relevant land
transaction such as is mentioned in sub-paragraph (7)(a) is linked
to another transaction, it may be assumed that any of the following
40
is the vendor under the relevant land transaction—
(a)
the vendor (determined in accordance with sub-paragraph
(3)), or
(b)
the transferor under any relevant assignment of rights.
      (9)
The following are “relevant assignments of rights” in relation to a
45
relevant land transaction—

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Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
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(a)
the assignment of rights mentioned in sub-paragraph
(1)(a);
(b)
any other transaction that is an assignment of rights in
relation to the original contract and has some subject-
matter in common with the assignment of rights
5
mentioned in paragraph (a).
Free-standing transfers: consideration and substantial performance
9     (1)
This paragraph applies where the pre-completion transaction is a
free-standing transfer.
      (2)
If the transferee acquires the subject-matter of the free-standing
10
transfer, the consideration for the transaction effecting that
acquisition is taken to include the consideration given for the free-
standing transfer (if that would not otherwise be the case).
      (3)
References in sub-paragraph (2) to an acquisition include an
acquisition deemed to take place under section 44(4) (and the
15
reference to the transaction effecting that acquisition is read
accordingly).
      (4)
An action taken by the transferee (or an assignee of the transferee)
that would, if taken by the original purchaser, constitute (for the
purposes of section 44(5)) the taking of possession of the whole or
20
substantially the whole of the subject-matter of the original
contract is treated as effecting the substantial performance of the
original contract.
      (5)
If a transaction that is a free-standing transfer in relation to a
contract is also a free-standing transfer in relation to another
25
contract (in particular, where there have been successive free-
standing transfers), each of those contracts may be regarded as
“the original contract” for the purposes of separate applications of
sub-paragraph (4).
      (6)
In sub-paragraph (4)—
30
(a)
the reference to the transferee includes a person connected
with the transferee, and
(b)
the reference to an assignee of the transferee includes a
person connected with such a person.
      (7)
References in this paragraph to an assignee of the transferee are to
35
a person who, as a result of a transaction that is an assignment of
rights in relation to the free-standing transfer, is entitled to call for
a conveyance of the whole or part of the subject-matter of the free-
standing transfer.
Meaning of “the vendor”: cases involving free-standing transfers
40
10    (1)
This paragraph applies where—
(a)
a land transaction is effected, or treated as effected, by an
acquisition falling within paragraph 9(2) (read with
paragraph 9(3)), or
(b)
paragraph 8(1) (meaning of “vendor” where the transferee
45
is the assignee under an assignment of rights) would apply

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but for paragraph 8(2) (exclusion of cases where the
original contract is itself a free-standing transfer).
      (2)
In this paragraph “the relevant land transaction” means the land
transaction—
(a)
mentioned in sub-paragraph (1)(a), or
5
(b)
in a case falling within sub-paragraph (1)(b), effected by
the conveyance to the transferee of the subject-matter of
the original contract or the substantial performance by the
transferee of the original contract.
      (3)
References in this paragraph to “the specified transaction” are to—
10
(a)
the free-standing transfer mentioned in paragraph 9(2), or
(b)
the original contract the subject-matter of which is
conveyed to the transferee or which is substantially
performed by the transferee.
      (4)
The general rule is that in relation to the relevant land transaction
15
references in this Part of this Act to “the vendor” are to be read as
references to the vendor or (as the case may be) transferor under
the first appropriate transaction (but see sub-paragraph (5)).
      (5)
In relation to the relevant land transaction, references to the
vendor in the specified provisions (see sub-paragraph (6)) are to
20
be read as including—
(a)
the vendor under the first appropriate transaction, and
(b)
each person who is the transferor in the case of a relevant
pre-completion transaction.
      (6)
The specified provisions are—
25
(a)
section 61(1)(a) (compliance with planning obligations:
conditions for exemption);
(b)
section 66(1) and (2) (transfers involving public bodies);
(c)
paragraph 8(1)(a) of Schedule 4 (debt as consideration);
(d)
paragraph 10(2)(c) of Schedule 4 (carrying out of works);
30
(e)
paragraph 16 of Schedule 4 (indemnity given by vendor).
      (7)
In determining under section 108(1) whether or not the relevant
land transaction is linked to another transaction it may be
assumed that any of the following is the vendor under the relevant
land transaction—
35
(a)
the vendor (determined under sub-paragraph (4)), or
(b)
the transferor under any relevant pre-completion
transaction.
      (8)
The following are “relevant pre-completion transactions” in
relation to the relevant land transaction—
40
(a)
the specified transaction;
(b)
any other transaction that is a pre-completion transaction
in relation to the original contract and has some subject-
matter in common with the specified transaction.

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Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
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Paragraph 10: “the first appropriate transaction” and “the original contract”
11    (1)
Subject to the following provisions of this paragraph, “the first
appropriate transaction” means the original contract.
      (2)
If the original contract is not performed at the same time as, and in
connection with the performance of, the specified transaction, “the
5
first appropriate transaction” means a transaction that is a pre-
completion transaction in relation to the original contract and
meets the following conditions.
      (3)
The conditions are that the pre-completion transaction—
(a)
is performed at the time when the specified transaction is
10
performed and (if it is not itself the specified transaction) is
performed in connection with the performance of the
specified transaction,
(b)
is a transaction on which the entitlement of the transferee
to call for the conveyance of the subject-matter of the
15
specified transaction depends, and
(c)
is not preceded by another pre-completion transaction
meeting the conditions in paragraphs (a) and (b).
      (4)
For the purposes of this paragraph—
(a)
a contract for a land transaction is taken to be “performed”
20
when it is substantially performed or completed
(whichever is earlier);
(b)
a free-standing transfer other than a contract is taken to be
“performed” when the transferee under that free-standing
transfer (or an assignee of that transferee, as defined in
25
paragraph 9(7)) acquires the subject-matter of that free-
standing transfer.
      (5)
Where the specified transaction is a pre-completion transaction in
relation to each of two or more contracts such as are mentioned in
paragraph 1(1)(a) that together form a series of such contracts
30
(each having some subject-matter in common with all the others),
references in paragraph 10 and this paragraph to “the original
contract” are to be read as references to the first contract in that
series.
      (6)
In this paragraph “the specified transaction” has the meaning
35
given by paragraph 10(3).
Minimum consideration rule
12    (1)
This paragraph applies where either of the following provisions
applies—
(a)
paragraph 4(3) (assignment of rights: chargeable interest
40
acquired or treated as acquired by transferee);
(b)
paragraph 9(2) (free-standing transfers: chargeable interest
acquired or treated as acquired by transferee).
      (2)
If there is a relevant connection between parties, then for the
purposes of paragraph 1(1) of Schedule 4 the consideration given
45
by the purchaser for the subject-matter of the land transaction
referred to in paragraph 4(4) or 9(2) is taken to be—

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Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
440

(a)
the amount that it would be apart from this sub-
paragraph, or
(b)
(if higher) the first minimum amount, or
(c)
(if higher than both those amounts) the second minimum
amount.
5
      (3)
There is a “relevant connection between parties” if—
(a)
the persons who are the transferor and transferee in
relation to the pre-completion transaction mentioned in
paragraph 4(1) or 9(1) (“the implemented transaction”) are
connected with each other, or are not acting at arm’s
10
length, or
(b)
sub-paragraph (4) applies.
      (4)
This sub-paragraph applies if—
(a)
the implemented transaction is one in a chain of successive
transactions (all having at least part of their subject-matter
15
in common) that are pre-completion transactions in
relation to the original contract, and
(b)
a person who is the transferor in relation to a pre-
completion transaction that precedes the implemented
transaction in the chain of transactions is connected with,
20
or not acting at arm’s length in relation to, the transferee
under the implemented transaction.
      (5)
Where the implemented transaction is a pre-completion
transaction in relation to—
(a)
a contract for a land transaction that is not itself a free-
25
standing transfer in relation to any other contract, and
(b)
a contract, or two or more successive contracts, that are
themselves free-standing transfers in relation to the
contract mentioned in paragraph (a),

references in this paragraph to “the original contract” are to the
30
contract mentioned in paragraph (a) (and do not include any
contract mentioned in paragraph (b)).
The first minimum amount
13    (1)
“The first minimum amount” means—
(a)
if the chargeable interest acquired (or treated as acquired)
35
under the land transaction referred to in paragraph 4(4) or
9(2) is the whole subject-matter of the original contract, the
amount of any consideration (in money or money’s worth)
agreed to be given, under the terms of the original contract,
for the acquisition of that subject-matter, or
40
(b)
if paragraph (a) does not apply, so much of the amount
mentioned in paragraph (a) as is referable, on a just and
reasonable apportionment, to the chargeable interest
mentioned in that paragraph.

This is subject to sub-paragraph (2).
45
      (2)
If conditions A to C are met, “the first minimum amount” means
the amount of any consideration (in money or money’s worth)
agreed, under the terms of the transfer to the first T, to be given in

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Schedule 37 — Stamp duty land tax: transactions entered into before completion of contract
441

respect of the subject-matter of that transaction (including any
consideration relating to an obligation of the transferor under the
transfer to the first T).
      (3)
The conditions mentioned in sub-paragraph (2) are as follows.
Condition A is that the pre-completion transaction referred to
5
in paragraph 4(4) or 9(2) is one of a chain of successive
transactions (all having at least part of their subject-matter
in common) that are pre-completion transactions in
relation to the original contract.
Condition B is that a person (“T”) is the transferor under a
10
pre-completion transaction that forms part of that chain
and T is connected with, or not acting at arm’s length in
relation to—
(a)
the transferee under that transaction, or
(b)
the transferee under a subsequent transaction in the
15
chain.
Condition C is that having regard to all the circumstances it
would not be reasonable to conclude that the obtaining of
a tax advantage (for any person) was the main purpose, or
one of main purposes, of T in entering into—
20
(a)
any pre-completion transaction in the chain, or
(b)
any arrangements of which such a transaction forms
part.
      (4)
Where conditions A to C are met, “the first T” means—
(a)
if condition B is met in relation to only one pre-completion
25
transaction, T, or
(b)
if condition B is met in relation to more than one pre-
completion transaction in the chain, the transferor in
relation to the first of the pre-completion transactions in
relation to which condition B is met.
30
      (5)
In this paragraph “the transfer to the first T” means—
(a)
the pre-completion transaction under which the first T is
the transferee, or
(b)
the original contract (if T is the original purchaser).
      (6)
In this paragraph—
35
(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);
(b)
“tax advantage” has the same meaning as in paragraph 18.
The second minimum amount
40
14    (1)
In paragraph 12 “the second minimum amount” means the total of
the net amounts of consideration given by the relevant parties.
      (2)
The net amount of consideration given by any relevant party is—

where—