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

439

 

transactions in relation to the original contract (all

having at least part of their subject-matter in

common), the transferee under any subsequent pre-

completion transaction in that chain;

(c)   

a person connected with a person falling within

5

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—

(a)   

the purchaser (under the notional land transaction or,

10

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

given for the preceding assignment of rights by—

15

(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

rights” means the assignment of rights as a result of which the

20

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

transaction that is an assignment of rights in relation to the

25

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

as making separate acquisition) applies by virtue of the substantial

30

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If the original contract is (to any extent) subsequently rescinded or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

paragraph 5(2), must (to that extent) be repaid by HMRC.

35

      (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

7          

Where the transferee under the assignment of rights referred to in

40

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

contract, and

45

(b)   

the references in paragraph 5 to the original contract are to

be read accordingly.

 
 

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

440

 

Assignment of rights: references to “the vendor”

8     (1)  

This paragraph applies where—

(a)   

the pre-completion transaction is an assignment of rights,

and

(b)   

either the subject-matter of the original contract is

5

conveyed to the transferee or the original contract is

substantially performed by the transferee.

      (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.

10

      (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

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

15

before the transferee became entitled to call for a conveyance of

the whole or part of the subject-matter of the original contract,

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.

20

      (5)  

In relation to a relevant land transaction, references to the vendor

in the specified provisions (see sub-paragraph (6)) are to be read

as including—

(a)   

the vendor under the original contract, and

(b)   

the transferor under any relevant assignment of rights.

25

      (6)  

The specified provisions are—

(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);

30

(d)   

paragraph 10(2)(c) of Schedule 4 (carrying out of works);

(e)   

paragraph 16 of Schedule 4 (indemnity given by vendor).

      (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

35

substantial performance mentioned in that provision;

(b)   

the notional land transaction mentioned in paragraph

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

40

transaction such as is mentioned in sub-paragraph (7)(a) is linked

to another transaction, it may be assumed that any of the following

is the vendor under the relevant land transaction—

(a)   

the vendor (determined in accordance with sub-paragraph

(3)), or

45

(b)   

the transferor under any relevant assignment of rights.

 
 

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

441

 

      (9)  

The following are “relevant assignments of rights” in relation to a

relevant land transaction—

(a)   

the assignment of rights mentioned in sub-paragraph

(1)(a);

(b)   

any other transaction that is an assignment of rights in

5

relation to the original contract and has some subject-

matter in common with the assignment of rights

mentioned in paragraph (a).

Free-standing transfers: consideration and substantial performance

9     (1)  

This paragraph applies where the pre-completion transaction is a

10

free-standing transfer.

      (2)  

If the transferee acquires the subject-matter of the free-standing

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).

15

      (3)  

References in sub-paragraph (2) to an acquisition include an

acquisition deemed to take place under section 44(4) (and the

reference to the transaction effecting that acquisition is read

accordingly).

      (4)  

An action taken by the transferee (or an assignee of the transferee)

20

that would, if taken by the original purchaser, constitute (for the

purposes of section 44(5)) the taking of possession of the whole or

substantially the whole of the subject-matter of the original

contract is treated as effecting the substantial performance of the

original contract.

25

      (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

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

30

sub-paragraph (4).

      (6)  

In sub-paragraph (4)—

(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

35

person connected with such a person.

      (7)  

References in this paragraph to an assignee of the transferee are to

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-

40

standing transfer.

Meaning of “the vendor”: cases involving free-standing transfers

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

45

paragraph 9(3)), or

 
 

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

442

 

(b)   

paragraph 8(1) (meaning of “vendor” where the transferee

is the assignee under an assignment of rights) would apply

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

5

transaction—

(a)   

mentioned in sub-paragraph (1)(a), or

(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

10

transferee of the original contract.

      (3)  

References in this paragraph to “the specified transaction” are to—

(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

15

performed by the transferee.

      (4)  

The general rule is that in relation to the relevant land transaction

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)).

20

      (5)  

In relation to the relevant land transaction, references to the

vendor in the specified provisions (see sub-paragraph (6)) are to

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

25

pre-completion transaction.

      (6)  

The specified provisions are—

(a)   

section 61(1)(a) (compliance with planning obligations:

conditions for exemption);

(b)   

section 66(1) and (2) (transfers involving public bodies);

30

(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).

      (7)  

In determining under section 108(1) whether or not the relevant

land transaction is linked to another transaction it may be

35

assumed that any of the following is the vendor under the relevant

land transaction—

(a)   

the vendor (determined under sub-paragraph (4)), or

(b)   

the transferor under any relevant pre-completion

transaction.

40

      (8)  

The following are “relevant pre-completion transactions” in

relation to the relevant land transaction—

(a)   

the specified transaction;

(b)   

any other transaction that is a pre-completion transaction

in relation to the original contract and has some subject-

45

matter in common with the specified transaction.

 
 

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

443

 

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—

 
 

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

444

 

(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

 
 

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

445

 

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—equation: plus[times[char[C],char[P]],minus[times[char[C],char[R]]]]

           

where—

 
 

 
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