Finance (No. 2) Bill (HC Bill 155)

Part 2 Co-ownership authorised contractual schemes

COACS seeding relief

10 (1) A land transaction is exempt from charge if conditions A to D are
5met.

Relief under this paragraph is referred to in this Part of this Act as
“COACS seeding relief”.

(2) Condition A is that the purchaser is a co-ownership authorised
contractual scheme (see section 102A).

(3) 10Condition B is that the main subject-matter of the transaction
consists of a major interest in land.

(4) Condition C is that the only consideration for the transaction is the
issue of units in the co-ownership authorised contractual scheme
to a person who is the vendor.

(5) 15Condition D is that the effective date of the transaction is a day
within the seeding period (see paragraph 11).

(6) This paragraph is subject to paragraph 12 (restrictions on
availability of relief) and paragraphs 13, 14, 16, 17 and 18
(withdrawal of relief).

20Meaning of “seeding period”

11 (1) In this Part of this Schedule, subject to sub-paragraph (2), the
“seeding period” means—

(a) the period beginning with the first property seeding date
and ending with the date of the first external investment
25into the co-ownership authorised contractual scheme, or

(b) if shorter, the period of 18 months beginning with the first
property seeding date.

(2) The co-ownership authorised contractual scheme may elect to
bring the seeding period to an end sooner than it would otherwise
30end under sub-paragraph (1).

Where an election is made, the seeding period is the period
beginning with the first property seeding date and ending with
the date specified in the election.

(3) An election under sub-paragraph (2) may be made—

(a) 35by being included in a notice accompanying a claim for
COACS seeding relief (see section 65A), or

(b) by separate notice in writing to HMRC.

(4) In sub-paragraphs (1) and (2), “the first property seeding date”
means the earliest effective date of a transaction in respect of
40which conditions A to C in paragraph 10 are met.

(5) In this paragraph—

• “external investment” means a non-land transaction in which
  the vendor is an external investor;

Finance (No. 2) BillPage 461

• “external investor” means a person other than a person who
  has been a vendor in a transaction—

  (a)

  the effective date of which is on or before the date of
  the non-land transaction, and

  (b)

  5in respect of which conditions A to C in paragraph 10
  are met;

• “non-land transaction” means a transaction by which the
  scheme acquires assets which do not consist of or include
  a chargeable interest.

10Restrictions on availability of relief

12 (1) This paragraph restricts the availability of COACS seeding relief
for a transaction in respect of which conditions A to D in
paragraph 10 are met.

(2) COACS seeding relief is not available unless, at the effective date
15of the transaction, the arrangements constituting the co-
ownership authorised contractual scheme require a person who is
the vendor to notify the operator of the scheme of the following
matters—

(a) the identity of the beneficial owner of the units in the
20scheme received in consideration of the transaction, and

(b) any disposal of units in the scheme on or after the effective
date of that transaction by that owner (or, where that
person is a company, by a group company) which is or
could be a relevant disposal (see paragraph 17).

25In paragraph (b) “group company” means a company which is a
member of the same group of companies as the person mentioned
in paragraph (a) for the purposes mentioned in paragraph 1(2) of
Schedule 7 (group relief).

(3) COACS seeding relief is not available if at the effective date of the
30transaction there are arrangements in existence by virtue of which,
at that or some later time, a person who is the vendor makes or
could make a disposal of units in the co-ownership authorised
contractual scheme which is or could be a relevant disposal (see
paragraph 17).

(4) 35COACS seeding relief is not available if the transaction—

(a) is not effected for bona fide commercial reasons, or

(b) forms part of arrangements of which the main purpose, or
one of the main purposes, is the avoidance of liability to
tax.

40“Tax” here means stamp duty, income tax, corporation tax, capital
gains tax or tax under this Part.

Withdrawal of relief: ceasing to be co-ownership authorised contractual scheme

13 (1) Where COACS seeding relief has been allowed in respect of a
transaction (“the relevant transaction”), and the purchaser ceases
45to be a co-ownership authorised contractual scheme—

(a) at any time after the effective date of that transaction but
within the seeding period,

(b) at any time in the control period (see paragraph 21), or

(c) in pursuance of, or in connection with, arrangements made
before the end of the control period,

then, subject to sub-paragraph (2), the relief, or an appropriate
5proportion of it, is withdrawn, and tax is chargeable in accordance
with this paragraph.

(2) Relief is withdrawn only if, at the time when the purchaser ceases
to be a co-ownership authorised contractual scheme, the
purchaser holds—

(a) 10the chargeable interest that was acquired by the purchaser
under the relevant transaction, or

(b) a chargeable interest that is derived from that interest.

(3) The amount chargeable is the amount that would have been
chargeable in respect of the relevant transaction but for COACS
15seeding relief or, as the case may be, an appropriate proportion of
the tax that would have been so chargeable.

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means
an appropriate proportion having regard to the subject-matter of
the relevant transaction and what is held by the purchaser at the
20time it ceases to be a co-ownership authorised contractual scheme.

Withdrawal of relief: genuine diversity of ownership condition not met

14 (1) Where COACS seeding relief has been allowed in respect of a
transaction (“the relevant transaction”), and the genuine diversity
of ownership condition (see paragraph 15) is not met—

(a) 25immediately before the end of the seeding period,

(b) at a time in the control period, or

(c) at a time after the end of the control period, where the
failure is pursuant to or in connection with arrangements
made before the end of that period,

30then, subject to sub-paragraph (2), the relief, or an appropriate
proportion of it, is withdrawn, and tax is chargeable in accordance
with this paragraph.

(2) The requirement to meet the genuine diversity of ownership
condition at a time mentioned in sub-paragraph (1) applies only to
35times when the co-ownership authorised contractual scheme
holds—

(a) the chargeable interest that was acquired by the scheme
under the relevant transaction, or

(b) a chargeable interest that is derived from that interest.

(3) 40The amount chargeable is the amount that would have been
chargeable in respect of the relevant transaction but for COACS
seeding relief or, as the case may be, an appropriate proportion of
the tax that would have been so chargeable.

(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means
45an appropriate proportion having regard to the subject-matter of
the relevant transaction and what is held by the scheme at the time
when the genuine diversity of ownership condition is not met.

(5) For the purposes of this paragraph, the operator of a co-ownership
authorised contractual scheme may apply to HMRC in writing for
clearance that the scheme meets the genuine diversity of
ownership condition, and where an application is made, HMRC
5must notify the scheme of its decision within 28 days of the receipt
of all the information that is needed to make the decision.

(6) Any such clearance has effect only for so long as the information
on which HMRC relies in granting clearance is materially
unchanged and the scheme is operated in accordance with it
10(including, in particular, continuing to operate in accordance with
condition C of the genuine diversity of ownership condition).

Genuine diversity of ownership condition

15 (1) This paragraph has effect for the purposes of paragraphs 14 and
18(4).

(2) 15A co-ownership authorised contractual scheme meets the genuine
diversity of ownership condition at any time when it meets
conditions A to C.

(3) Condition A is that the scheme documents, which are available to
investors and to HMRC, contain—

(a) 20a statement specifying the intended categories of investor,

(b) an undertaking that units in the scheme will be widely
available, and

(c) an undertaking that units in the scheme will be marketed
and made available in accordance with the requirements of
25sub-paragraph (6)(a).

(4) Condition B is that—

(a) the specification of the intended categories of investor does
not have a limiting or deterrent effect, and

(b) any other terms or conditions governing participation in
30the scheme do not have a limiting or deterrent effect.

(5) In sub-paragraph (4) “limiting or deterrent effect” means an effect
which—

(a) limits investors to a limited number of specific persons or
specific groups of connected persons, or

(b) 35deters a reasonable investor falling within one of (what are
specified as) the intended categories of investor from
investing in the scheme.

(6) Condition C is that—

(a) units in the scheme are marketed and made available—

(i) 40sufficiently widely to reach the intended categories
of investors, and

(ii) in a manner appropriate to attract those categories
of investors, and

(b) a person who falls within one of the intended categories of
45investors can, upon request to the operator of the scheme,
obtain information about the scheme and acquire units in
it.

(7) A scheme is not regarded as failing to meet condition C at any time
by reason of the scheme’s having, at that time, no capacity to
receive additional investments, unless—

(a) the capacity of the scheme to receive investments in it is
5fixed by the scheme documents (or otherwise), and

(b) a pre-determined number of specific persons or specific
groups of connected persons make investments in the
scheme which collectively exhaust all, or substantially all,
of that capacity.

(8) 10A co-ownership authorised contractual scheme also meets the
genuine diversity of ownership condition at any time when—

(a) there is a feeder fund in relation to the scheme (see
paragraph 20), and

(b) conditions A to C are met in relation to the scheme after
15taking into account—

(i) the scheme documents relating to the feeder fund,
and

(ii) the intended investors in the feeder fund.

(9) Section 1122 of CTA 2010 (connected persons) has effect for the
20purposes of this paragraph.

Withdrawal of relief: portfolio test not met

16 (1) Where COACS seeding relief has been allowed in respect of a
transaction, and the portfolio test is not met immediately before
the end of the seeding period, the relief is withdrawn and tax is
25chargeable in accordance with sub-paragraph (2).

See sub-paragraph (7) for the meaning of “portfolio test”.

(2) The amount chargeable is the amount that would have been
chargeable in respect of the transaction but for COACS seeding
relief.

(3) 30Where COACS seeding relief has been allowed in respect of a
transaction (“the relevant transaction”), and the portfolio test is
met immediately before the end of the seeding period, but is not
met—

(a) at a time in the control period, or

(b) 35at a time after the end of the control period, where the
failure is pursuant to or in connection with arrangements
made before the end of that period,

then, subject to sub-paragraph (4), the relief, or an appropriate
proportion of it, is withdrawn, and tax is chargeable in accordance
40with sub-paragraph (5).

(4) The requirement to meet the portfolio test at a time mentioned in
sub-paragraph (3)(a) or (b) applies only to times when the co-
ownership authorised contractual scheme holds—

(a) the chargeable interest that was acquired by the scheme
45under the relevant transaction, or

(b) a chargeable interest that is derived from that interest.

(5) The amount chargeable is the amount that would have been
chargeable in respect of the relevant transaction but for COACS
seeding relief or, as the case may be, an appropriate proportion of
the tax that would have been so chargeable.

(6) 5In sub-paragraphs (3) and (5) an “appropriate proportion” means
an appropriate proportion having regard to the subject-matter of
the relevant transaction and what is held by the scheme at the time
when the portfolio test is not met.

(7) The portfolio test is a requirement that the scheme meets—

(a) 10the non-residential portfolio test (see sub-paragraph (8)),
or

(b) the residential portfolio test (see sub-paragraph (9)).

(8) The “non-residential portfolio test” is met at any time if—

(a) the scheme holds at least 10 seeded interests at that time,

(b) 15so much of the total chargeable consideration as is
attributable to all the seeded interests held by the scheme
at that time (“the seeded portfolio”) is at least £100 million,
and

(c) so much of the total chargeable consideration as is
20attributable to so many of those seeded interests as are
interests in or over residential property (if any) does not
exceed 10% of the seeded portfolio.

(9) The “residential portfolio test” is met at any time if—

(a) so much of the total chargeable consideration as is
25attributable to all the seeded interests held by the scheme
at that time is at least £100 million, and

(b) at least 100 of the seeded interests held by the scheme at
that time are interests in or over residential property.

(10) In sub-paragraphs (8) and (9)—

• 30“seeded interest” means a chargeable interest acquired by the
  scheme in a transaction for which COACS seeding relief is
  allowed (whether or not relief is subsequently withdrawn
  to any extent) (a “seeding transaction”), and

• “total chargeable consideration” means the total of the
  35chargeable consideration for all seeding transactions.

(11) For the purposes of this paragraph, section 116(7) does not apply
(modification of what counts as residential property).

Withdrawal of relief: units disposed of

17 (1) This paragraph applies where—

(a) 40a person (“V”) makes a relevant disposal of one or more
units in a co-ownership authorised contractual scheme—

(i) at any time in the seeding period,

(ii) at any time in the control period, or

(iii) in pursuance of, or in connection with,
45arrangements made before the end of the control
period, and

(b) there is, in relation to that disposal, a relevant seeding
transaction (see sub-paragraph (6)).

(2) In respect of a transaction which is, in relation to the relevant
disposal, a relevant seeding transaction—

(a) 5COACS seeding relief is withdrawn to the extent set out in
this paragraph, and

(b) tax is chargeable in accordance with this paragraph.

(3) V’s disposal of units in a scheme is a “relevant disposal” for the
purposes of this paragraph if, in relation to the disposal, A exceeds
10B.

(4) In this paragraph—

• “A” means—

  (a)

  where the value of V’s investment in the scheme
  immediately before the disposal is equal to or greater
  15than the total of the chargeable consideration for all
  relevant seeding transactions, the total of the
  chargeable consideration for all relevant seeding
  transactions, or

  (b)

  where the value of V’s investment in the scheme
  20immediately before the disposal is less than the total
  of the chargeable consideration for all relevant
  seeding transactions, the value of V’s investment in
  the scheme immediately before the disposal, and

• “B” means the value of V’s investment in the scheme
  25immediately after the disposal.

(5) The amount chargeable in respect of a relevant seeding transaction
(“RST”) is—

where—

• 30“C” means the difference between A and B;

• “CCRST” means the total of the chargeable consideration for
  all relevant seeding transactions;

• “SDLT” means the amount of tax that would have been
  chargeable in respect of RST but for COACS seeding relief,
  35ignoring any amount of tax that has been charged under
  this paragraph in respect of RST in relation to an earlier
  disposal of units by V.

(6) In this paragraph—

• “group company” means (where V is a company) a company
  40which is a member of the same group of companies as V
  for the purposes mentioned in paragraph 1(2) of Schedule
  7 (group relief);

• “relevant seeding transaction”, in relation to a disposal of
  units by V in a co-ownership authorised contractual
  45scheme, means a seeding transaction—

  Finance (No. 2) BillPage 467

  (a)

  the effective date of which is, or is before, the date of
  the disposal,

  (b)

  in which that scheme is the purchaser, and

  (c)

  in which a vendor is—

  (i)

  5V, or

  (ii)

  (where V is a company) a company which is a
  group company at the time of the disposal;

• “seeding transaction” means a transaction in respect of which
  COACS seeding relief is allowed (whether or not relief is
  10subsequently withdrawn to any extent);

• “the value of V’s investment in the scheme” at a particular
  time means the market value of all units in the co-
  ownership authorised contractual scheme held at that time
  by—

  (a)

  15V, and

  (b)

  (where V is a company) a company which—

  (i)

  is a group company at that time, and

  (ii)

  before that time, has been a vendor in one or
  more seeding transactions in which the
  20scheme was the purchaser.

(7) For the purposes of this paragraph, the “market value” on a
particular date of units in the scheme is an amount equal to the
buying price (that is, the lower price) published by the operator on
that date (or, if no such price is published on that date, on the latest
25date before).

Withdrawal of relief: dwelling occupied by non-qualifying individual

18 (1) This paragraph applies to a transaction (“the relevant
transaction”) if—

(a) COACS seeding relief has been allowed in respect of the
30transaction,

(b) the main subject-matter of the transaction consists of a
chargeable interest in or over land which is or includes a
dwelling, and

(c) a non-qualifying individual (see paragraph 19) is
35permitted to occupy the dwelling at any time on or after
the effective date of the transaction.

The dwelling which a non-qualifying individual is permitted to
occupy is referred to as “the disqualifying dwelling”.

(2) The relief, or an appropriate proportion of it, is withdrawn, and
40tax is chargeable in accordance with this paragraph.

This is subject to sub-paragraphs (3) and (4).

(3) Relief is withdrawn only if, at the time a non-qualifying individual
is permitted to occupy the disqualifying dwelling, the co-
ownership authorised contractual scheme holds a chargeable
45interest in or over that dwelling—

(a) that was acquired by the scheme under the relevant
transaction, or

(b) that is derived from an interest so acquired.

(4) Where a non-qualifying individual is first permitted to occupy the
disqualifying dwelling at a time after the end of the control period,
relief is withdrawn only if, at that time, the scheme fails to meet
the genuine diversity of ownership condition (see paragraph 15).

(5) 5The amount chargeable is the amount that would have been
chargeable in respect of the relevant transaction but for COACS
seeding relief or, as the case may be, an appropriate proportion of
the tax that would have been so chargeable.

(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means
10an appropriate proportion having regard to the extent to which
the subject-matter of the relevant transaction was an interest in or
over land other than the disqualifying dwelling.

19 (1) In paragraph 18 “non-qualifying individual”, in relation to a land
transaction and a co-ownership authorised contractual scheme,
15means any of the following—

(a) an individual who is a major participant in the scheme;

(b) an individual who is connected with a major participant in
the scheme;

(c) an individual who is connected with the operator of the
20scheme (see section 102A) or the depositary of the scheme;

(d) a relevant settlor;

(e) the spouse or civil partner of an individual falling within
paragraph (b), (c) or (d);

(f) a relative of an individual falling within paragraph (b), (c)
25or (d), or the spouse or civil partner of a relative of an
individual falling within paragraph (b), (c) or (d);

(g) a relative of the spouse or civil partner of an individual
falling within paragraph (b), (c) or (d);

(h) the spouse or civil partner of an individual falling within
30paragraph (g).

(2) An individual who participates in a scheme is a “major
participant” in it if the individual—

(a) is entitled to a share of at least 50% either of all the profits
or income arising from the scheme or of any profits or
35income arising from it that may be distributed to
participants, or

(b) would in the event of the winding up of the scheme be
entitled to 50% or more of the assets of the scheme that
would then be available for distribution among the
40participants.

(3) The reference in sub-paragraph (2)(a) to profits or income arising
from the scheme is to profits or income arising from the
acquisition, holding, management or disposal of the property
subject to the scheme.

(4) 45In this paragraph—

• “depositary”, in relation to a co-ownership authorised
  contractual scheme, means the person to whom the
  property subject to the scheme is entrusted for
  safekeeping;

Finance (No. 2) BillPage 469

• “relative” means brother, sister, ancestor or lineal
  descendant;

• “relevant settlor”, in relation to a land transaction, means an
  individual who is a settlor in relation to a relevant
  5settlement (as defined in sub-paragraph (5));

• “settlement” has the same meaning as in Chapter 5 of Part 5
  of ITTOIA 2005 (see section 620 of that Act).

(5) Where a person, in the capacity of trustee of a settlement, is
connected with a person who is the purchaser under a land
10transaction, that settlement is a “relevant settlement” in relation to
the transaction.

(6) In sub-paragraph (5) “trustee” is to be read in accordance with
section 1123(3) of CTA 2010 (“connected” persons:
supplementary).

(7) 15Section 1122 of CTA 2010 (connected persons) has effect for the
purposes of this paragraph, but for those purposes, subsections (7)
and (8) of that section (application of rules about connected
persons to partnerships) are to be disregarded.

Part 3 20Interpretation

“Feeder fund” and “units”

20 In this Schedule—

• a “feeder fund” of a property AIF means a unit trust
  scheme—

  (a)

  25one of the main objects of which is investment in the
  property AIF, and

  (b)

  which is managed by the same person as the property
  AIF;

• a “feeder fund” of a co-ownership authorised contractual
  30scheme means an open-ended investment company, an
  offshore fund or a unit trust scheme—

• (a)

  one of the main objects of which is investment in the
  co-ownership authorised contractual scheme, and

  (b)

  which is managed by the same person as the scheme;

• 35“units in the property AIF” means—

  (a)

  units in the property AIF (and, where the property
  AIF is a part of an umbrella company as mentioned in
  regulation 7(1) and (2) of the AIF (Tax) Regulations,
  this means units in the separate pool to which that
  40part of the umbrella company relates), and

  (b)

  units in a feeder fund of the property AIF;

• “units in the co-ownership authorised contractual scheme”
  means—

  (a)

  units in the co-ownership authorised contractual
  45scheme (and, where the co-ownership authorised
  contractual scheme is a sub-scheme of an umbrella
  COACS (see section 102A(3) and (4)), this means units

  Finance (No. 2) BillPage 470

  in the separate pool to which that sub-scheme relates),
  and

  (b)

  units in a feeder fund of the scheme;

• “units” means the rights or interests (however described) of
  5the participants in the property AIF or the co-ownership
  authorised contractual scheme.

Interpretation of other terms

21 In this Schedule—

• the “AIF (Tax) Regulations” means the Authorised
  10Investment Funds (Tax) Regulations 2006 (S.I. 2006/964S.I. 2006/964);

• “arrangements” includes any scheme, agreement or
  understanding, whether or not legally enforceable;

• “attributable” means attributable on a just and reasonable
  basis;

• 15“authorised corporate director”, in relation to a property AIF,
  has the same meaning as in regulation 8 of the AIF (Tax)
  Regulations;

• “COACS seeding relief” means relief under paragraph 10;

• “control period” means the period of 3 years beginning with
  20the day following the last day of the seeding period;

• “co-ownership authorised contractual scheme” is to be
  construed in accordance with section 102A (see in
  particular subsections (2), (5), (7) and (8) of that section);

• “CTA 2010” means the Corporation Tax Act 2010;

• 25“FSMA 2000” means the Financial Services and Markets Act
  2000;

• the “genuine diversity of ownership condition”, in relation to
  a co-ownership authorised contractual scheme, has the
  meaning given by paragraph 15;

• 30“ITTOIA 2005” means the Income Tax (Trading and Other
  Income) Act 2005;

• “non-qualifying individual” has the meaning given by
  paragraph 9 (in relation to a property AIF) and paragraph
  19 (in relation to a co-ownership authorised contractual
  35scheme);

• “offshore fund” has the meaning given by section 355 of the
  Taxation (International and Other Provisions) Act 2010;

• “open-ended investment company” has the meaning given
  by section 236 of FSMA 2000;

• 40“operator”, in relation to a co-ownership authorised
  contractual scheme, has the same meaning as in section
  102A;

• “PAIF seeding relief” means relief under paragraph 1;

• “participant” is to be read in accordance with section 235 of
  45FSMA 2000;

• “portfolio test” has the meaning given by paragraph 6(7) (in
  relation to a property AIF) and paragraph 16(7) (in relation
  to a co-ownership authorised contractual scheme);

Finance (No. 2) BillPage 471

• “property AIF” is to be construed in accordance with
  paragraph 2 (see in particular sub-paragraphs (2), (3) and
  (5) of that paragraph);

• “relevant disposal” has the meaning given by paragraph 7(3)
  5(in relation to a property AIF) and paragraph 17(3) (in
  relation to a co-ownership authorised contractual scheme);

• “seeding period” has the meaning given by paragraph 3 (in
  relation to a property AIF) and paragraph 11 (in relation to
  a co-ownership authorised contractual scheme);

• 10“unit trust scheme” has the meaning given by section 237(1)
  of FSMA 2000.”

Part 3 Consequential amendments

5 FA 2003 is amended in accordance with this Part.

6 15In section 75C (anti-avoidance: supplemental), in subsection (4), after
“Schedule 6A” insert “, 7A”.

7 (1) Section 81 (further return where relief withdrawn) is amended as follows.

(2) In subsection (1)—

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

(b) 20after paragraph (b) insert—

“(ba) paragraph 5, 7 or 8 of Schedule 7A (PAIF seeding
relief),

(bb) paragraph 13, 17 or 18 of Schedule 7A (COACS
seeding relief), or”.

(3) 25In subsection (1A), after “transactions)” insert “, or under paragraph 6 of
Schedule 7A (PAIF seeding relief) or paragraph 14 or 16 of Schedule 7A
(COACS seeding relief),”.

(4) In subsection (1B), after paragraph (e) insert—

“(f) in the case of relief under paragraph 6 of Schedule 7A (PAIF
30seeding relief: portfolio test)—

(i) where relief is withdrawn under paragraph 6(1), the
last day of the seeding period (see paragraph 3 of that
Schedule), or

(ii) where relief is withdrawn under paragraph 6(3), the
35first time mentioned in paragraph 6(3)(a) or (b) at
which the portfolio test was not met;

(g) in the case of relief under paragraph 14 of Schedule 7A
(COACS seeding relief: genuine diversity of ownership
condition), the first time mentioned in paragraph 14(1) at
40which the genuine diversity of ownership condition was not
met;

(h) in the case of relief under paragraph 16 of Schedule 7A
(COACS seeding relief: portfolio test)—

(i) where relief is withdrawn under paragraph 16(1), the
45last day of the seeding period (see paragraph 11 of
that Schedule), or

(ii) where relief is withdrawn under paragraph 16(3), the
first time mentioned in paragraph 16(3)(a) or (b) at
which the portfolio test was not met.”

(5) In subsection (4), after paragraph (b) insert—

“(ba) 5in relation to the withdrawal of PAIF seeding relief—

(i) the purchaser ceasing to be a property AIF as
mentioned in paragraph 5 of Schedule 7A,

(ii) a person making a relevant disposal of units as
mentioned in paragraph 7 of that Schedule, or

(iii) 10the grant of permission to a non-qualifying individual
to occupy a dwelling as mentioned in paragraph 8 of
that Schedule;

(bb) in relation to the withdrawal of COACS seeding relief—

(i) the purchaser ceasing to be a co-ownership
15authorised contractual scheme as mentioned in
paragraph 13 of Schedule 7A,

(ii) a person making a relevant disposal of units as
mentioned in paragraph 17 of that Schedule, or

(iii) the grant of permission to a non-qualifying individual
20to occupy a dwelling as mentioned in paragraph 18 of
that Schedule;”.

8 In section 86 (payment of tax), in subsection (2)—

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

(b) after paragraph (b) insert—

“(ba) 25Part 1 of Schedule 7A (PAIF seeding relief),

(bb) Part 2 of Schedule 7A (COACS seeding relief), or”.

9 (1) Section 87 (interest on unpaid tax) is amended as follows.

(2) In subsection (3)—

(a) in paragraph (a)—

(i) 30omit “or” at the end of sub-paragraph (ii), and

(ii) after sub-paragraph (ii) insert—

“(“iia) paragraph 5, 7 or 8 of Schedule 7A
(PAIF seeding relief),

(iib) paragraph 13, 17 or 18 of Schedule 7A
35(COACS seeding relief), or”;

(b) after paragraph (aza) insert—

“(azb) in the case of an amount payable under paragraph
6(3) of Schedule 7A (PAIF seeding relief: portfolio
test), the first time mentioned in paragraph 6(3)(a) or
40(b) at which the portfolio test was not met;

(azc) in the case of an amount payable under paragraph
14(1) of Schedule 7A (COACS seeding relief: genuine
diversity of ownership condition) because the
genuine diversity of ownership condition was not
45met at a time mentioned in paragraph 14(1)(b) or (c),
the first time mentioned in paragraph 14(1)(b) or (c) at
which that condition was not met;

(azd) in the case of an amount payable under paragraph
16(3) of Schedule 7A (COACS seeding relief: portfolio

test), the first time mentioned in paragraph 16(3)(a) or
(b) at which the portfolio test was not met;”.

(3) In subsection (4), for “means—” to the end substitute “has the same meaning
as in section 81(4).”

10 5In section 118 (market value)—

(a) the existing text becomes subsection (1), and

(b) after subsection (1) insert—

“(2) This is subject to paragraphs 7(7) and 17(7) of Schedule 7A
(which define “market value” for certain purposes of PAIF
10seeding relief and COACS seeding relief).”

11 In section 122 (index of defined expressions), at the appropriate place
insert—

12 In Schedule 4A (SDLT: higher rate for certain transactions), in paragraph
2(6)—

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

(b) 25after paragraph (d) insert—

“(da) Schedule 7A (PAIF seeding relief and COACS
seeding relief), and”, and”

(c) in paragraph (e), for “(d)” substitute “(da)”.

13 In Schedule 6B (transfers involving multiple dwellings), in paragraph
302(4)(b), after “Schedule 7” insert “, Schedule 7A”.

14 (1) In Schedule 17A (further provisions relating to leases), paragraph 11 (cases
where assignment of lease treated as grant of lease) is amended as follows.

(2) In sub-paragraph (3), after paragraph (b) insert—

“(ba) Part 1 or 2 of Schedule 7A (PAIF seeding relief and COACS
35seeding relief);”.

(3) In sub-paragraph (4), after “acquisition relief” insert “, PAIF seeding relief,
COACS seeding relief”.

(4) In sub-paragraph (5), after paragraph (b) insert—

“(ba) in relation to the withdrawal of PAIF seeding relief—

(i) 40the purchaser ceasing to be a property AIF as
mentioned in paragraph 5 of Schedule 7A,

(ii) a person making a relevant disposal of units as
mentioned in paragraph 7 of that Schedule, or

(iii) the grant of permission to a non-qualifying individual
to occupy a dwelling as mentioned in paragraph 8 of
5that Schedule;

(bb) in relation to the withdrawal of COACS seeding relief—

(i) the purchaser ceasing to be a co-ownership
authorised contractual scheme as mentioned in
paragraph 13 of Schedule 7A,

(ii) 10a person making a relevant disposal of units as
mentioned in paragraph 17 of that Schedule, or

(iii) the grant of permission to a non-qualifying individual
to occupy a dwelling as mentioned in paragraph 18 of
that Schedule;”.

(5) 15After sub-paragraph (5) insert—

“(6) This paragraph also does not apply where the relief in question is
PAIF seeding relief or COACS seeding relief and is withdrawn as
a result of a requirement not being met at a time which is before
the effective date of the assignment of the lease.

(7) 20For the purposes of sub-paragraph (6), the reference to a
requirement not being met is a reference to—

(a) in relation to the withdrawal of PAIF seeding relief under
paragraph 6 of Schedule 7A, the portfolio test not being
met (see paragraph 6(7));

(b) 25in relation to the withdrawal of COACS seeding relief
under paragraph 14 of Schedule 7A, the genuine diversity
of ownership condition not being met (see paragraph 15);

(c) in relation to the withdrawal of COACS seeding relief
under paragraph 16 of Schedule 7A, the portfolio test not
30being met (see paragraph 16(7)).”

Part 4 Commencement

15 (1) The amendments made by Parts 2 and 3 of this Schedule have effect in
relation to any land transaction of which the effective date is, or is after, the
35date on which this Act is passed.

(2) But those amendments do not have effect in relation to a transaction if—

(a) the transaction is effected in pursuance of a contract entered into and
substantially performed before the date on which this Act is passed,
or

(b) 40the transaction is effected in pursuance of a contract entered into
before that date and is not excluded by sub-paragraph (3).

(3) A transaction effected in pursuance of a contract entered into before the date
on which this Act is passed is excluded by this sub-paragraph if—

(a) there is any variation of the contract, or assignment of rights under
45the contract, on or after that date,

(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, subsale or other
transaction relating to the whole or part of the subject-matter 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) 5In this paragraph—

• “purchaser” has the same meaning as in Part 4 of FA 2003 (see section
  43(4) of that Act);

• “substantially performed”, in relation to a contract, has the same
  meaning as in that Part (see section 44(5) of that Act).

Section 141

10SCHEDULE 17 Aqua methanol etc

Part 1 Aqua methanol

Introductory

1 15HODA 1979 is amended as follows.

Definition

2 After section 2AB insert—

“2AC Aqua methanol

In this Act “aqua methanol” means a liquid fuel which meets each of
20the following conditions—

(a) the amount of water it contains is not less than 4.7 per cent
and not more than 5.3 per cent by volume,

(b) the amount of methanol it contains is not less than 96 per cent
by volume of the remainder of the substance, and

(c) 25at a temperature of 15°C and under a pressure of 1013.25
millibars, it has a density of not less than 0.81 g/ml and not
more than 0.82 g/ml.”

3 In section 2A (power to amend definitions), in subsection (1), after
paragraph (b) insert—

“(ba) 30aqua methanol;”.

Charging of excise duty

4 After section 6AF insert—

“6AG Excise duty on aqua methanol

(1) A duty of excise shall be charged on the setting aside for a chargeable
35use by any person, or (where it has not already been charged under
this section) on the chargeable use by any person, of aqua methanol.

(2) In subsection (1) “chargeable use” means use—

(a) as fuel for any engine, motor or other machinery, or

(b) as an additive or extender in any substance so used.

(3) The rate of duty under this section is—

(a) in the case of a chargeable use within subsection (2)(a), £0.079
5a litre;

(b) in the case of a chargeable use within subsection (2)(b), the
rate prescribed by order made by the Treasury.

(4) In exercising their power under subsection (3)(b), the Treasury shall
so far as practicable secure that aqua methanol set aside for use or
10used as an additive or extender in any substance is charged with
duty at the same rate as the substance in which it is an additive or
extender.

(5) The power of the Treasury to make an order under this section shall
be exercisable by statutory instrument subject to annulment in
15pursuance of a resolution of the House of Commons.

(6) An order under this section—

(a) may make different provision for different cases, and

(b) may prescribe the rate of duty under subsection (3)(b) by
reference to the rate of duty under this Act in respect of any
20other substance.

6AH Application to aqua methanol of provisions relating to hydrocarbon
oil

(1) The Commissioners may by regulations provide for—

(a) references in this Act, or specified references in this Act, to
25hydrocarbon oil to be construed as including references to
aqua methanol;

(b) references in this Act, or specified references in this Act, to
duty on hydrocarbon oil to be construed as including
references to duty under section 6AG above;

(c) 30aqua methanol to be treated for the purposes of such of the
following provisions of this Act as may be specified as if it fell
within a specified description of hydrocarbon oil.

(2) Where the effect of provision made under subsection (1) above is to
extend any power to make regulations, provision made in exercise of
35the power as extended may be contained in the same statutory
instrument as the provision extending the power.

(3) In this section “specified” means specified by regulations under this
section.

(4) Regulations under this section may make different provision for
40different cases.

(5) Paragraph (b) of subsection (1) above shall not be taken as
prejudicing the generality of paragraph (a) of that subsection.”

5 In section 6A (fuel substitutes), in subsection (1)—

(a) omit the “or” after paragraph (d), and

(b) 45after paragraph (e) insert “, or

(f) aqua methanol.”

Mixing of aqua methanol

6 (1) For the italic heading before section 20A substitute “Mixing”.

(2) After section 20AAB insert—

“20AAC Prohibition on mixing of aqua methanol

(1) 5Aqua methanol on which duty under section 6AG(3)(a) of this Act
has been charged must not be mixed with any relevant substance.

(2) In subsection (1) “relevant substance” means biodiesel, bioethanol,
bioblend, bioethanol blend or hydrocarbon oil.

(3) A person commits an offence under this subsection if—

(a) 10the person intentionally uses aqua methanol in contravention
of subsection (1) above, or

(b) the person supplies aqua methanol, intending that it will be
used in contravention of subsection (1) above.

(4) A person guilty of an offence under subsection (3) above shall be
15liable—

(a) on summary conviction in England and Wales—

(i) to imprisonment for a term not exceeding 12 months
(or 6 months, if the offence was committed before the
commencement of section 154(1) of the Criminal
20Justice Act 2003), or

(ii) to a fine not exceeding £20,000 or (if greater) 3 times
the value of the aqua methanol in question,

or both;

(b) on summary conviction in Scotland—

(i) 25to imprisonment for a term not exceeding 12 months,
or

(ii) to a fine not exceeding the statutory maximum or (if
greater) 3 times the value of the aqua methanol in
question,

30or both;

(c) on summary conviction in Northern Ireland—

(i) to imprisonment for a term not exceeding 6 months,
or

(ii) to a fine not exceeding the statutory maximum or (if
35greater) 3 times the value of the aqua methanol in
question,

or both;

(d) on conviction on indictment, to imprisonment for a term not
exceeding 7 years or a fine, or both.

(5) 40Any aqua methanol, or any mixture containing aqua methanol, in
respect of which an offence under subsection (3) above has been
committed shall be liable to forfeiture.

20AAD Mixing of aqua methanol in contravention of prohibition:
adjustment of duty

(1) A duty of excise shall be charged on a mixture which is produced by
mixing aqua methanol on which duty under section 6AG(3)(a) of this
5Act has been charged with a relevant substance.

(2) In subsection (1) “relevant substance” means biodiesel, bioethanol,
bioblend, bioethanol blend or hydrocarbon oil.

(3) The rate of duty on a mixture under subsection (1) shall be the rate of
duty specified in section 6(1A)(c) (general rate for heavy oil).

(4) 10The person liable to pay duty charged under this section on
production of a mixture is the person producing the mixture.

(5) Where it appears to the Commissioners—

(a) that a person (“P”) has produced a mixture on which duty is
charged under this section, and

(b) 15that P is the person liable to pay the duty,

they may assess the amount of duty due from P to the best of their
judgment and notify that amount to P or P’s representative.