Finance Bill

House of Lords

Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 40 — Stamp duty land tax: relief from 15% rate
475

ensure that the dwelling will begin to be, or will return to being,
made available as mentioned in those paragraphs.
      (8)
Where the relevant person is a company, “relevant group
member” means a company which is a member of the same group
of companies as the relevant person for the purposes mentioned in
5
paragraph 1(2) of Schedule 7.
      (9)
In this paragraph—
(a)
“relevant interest” has the same meaning as in paragraph
6D;
(b)
“the relevant person” means the person (other than the
10
financial institution) who enters into the arrangements
mentioned in section 71A(1), 72(1), 72A(1) or 73(1);
(c)
references to a major interest in land include an undivided
share in a major interest in land.
6H    (1)
This paragraph applies where relief under paragraph 5F
15
(farmhouses) has been allowed, in accordance with paragraph
6A(4) or 6B(3), in relation to the purchase of a major interest in
land.
      (2)
The relief is withdrawn if at any time in the control period when
the relevant person holds a relevant interest (whether jointly, or in
20
common, or otherwise) any requirement in sub-paragraph (4) is
not met.
      (3)
In sub-paragraph (2) “the control period” means the three years
beginning with the effective date of the first transaction.
      (4)
The requirements are that—
25
(a)
the land mentioned in paragraph 5F(2) is occupied for the
purposes of a qualifying trade of farming, and
(b)
the dwelling is occupied for the purposes of that trade by
a qualifying farm worker.
      (5)
The requirements in sub-paragraph (4) do not apply in relation to
30
times when, because of a change of circumstances that is
unforeseen and beyond the relevant person’s control, it is not
reasonable to expect those requirements to be met.
      (6)
Sub-paragraph (7) applies if at some time in the control period a
requirement in sub-paragraph (4)—
35
(a)
has not begun to be met, or
(b)
has ceased to be met.
      (7)
The requirement is treated as being met if reasonable steps are
being taken to ensure that the requirement begins to be met, or is
again met.
40
      (8)
In this paragraph—
(a)
“the relevant interest” has the same meaning as in
paragraph 6D;
(b)
“the relevant person” means the person (other than the
financial institution) who enters into the arrangements
45
mentioned in section 71A(1), 72(1), 72A(1) or 73(1);

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Schedule 40 — Stamp duty land tax: relief from 15% rate
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(c)
references to a major interest in land include an undivided
share in a major interest in land.
      (6)
In paragraph 9 (interpretation), at the appropriate places insert—
““financial institution” has the same meaning as in sections 71A
to 73B (see section 73BA);”
5
““property development trade” has the meaning given by
paragraph 5(3);”
““property rental business” has the meaning given by section
133(4) of the Finance Act 2013;”
““property trading business” has the meaning given by
10
paragraph 5(3);”
““qualifying farm worker” has the meaning given by paragraph
5F(4);”
““qualifying trade” has the meaning given by paragraph 5B(3);”
““qualifying trade of farming” has the meaning given by
15
paragraph 5F(5);”.
Minor and consequential amendments
3     (1)
Section 81 (further return where relief withdrawn) is amended as follows.
      (2)
After subsection (1) insert—
“(1A)
Where relief is withdrawn to any extent under any of paragraphs 5G
20
to 5K of Schedule 4A (higher rate for certain transactions) the
purchaser must deliver a further return before the end of the period
of 30 days after the relevant date.
(1B)
In subsection (1A) “the relevant date” means—
(a)
in the case of relief under paragraph 5 of Schedule 4A
25
(businesses of letting, trading in or redeveloping properties),
the first day in the period mentioned in paragraph 5G(2) on
which a requirement under paragraph 5G(3) was not met in
the case of the chargeable interest in question;
(b)
in the case of relief under paragraph 5B of that Schedule
30
(trades involving making a dwelling available to the public),
the first day in the period mentioned in paragraph 5H(2) on
which a requirement under paragraph 5H(3) was not met in
the case of the chargeable interest in question;
(c)
in the case of relief under paragraph 5C of that Schedule
35
(financial institutions acquiring dwellings in the course of
lending), the first day in the period mentioned in paragraph
5I(2) on which a requirement under paragraph 5I(3) was not
met in the case of the chargeable interest in question;
(d)
in the case of relief under paragraph 5D of that Schedule
40
(dwellings for occupation by certain employees etc), the first
day in the period mentioned in paragraph 5J(2) on which a
requirement under paragraph 5J(3) was not met in the case of
the chargeable interest in question;
(e)
in the case of relief under paragraph 5F of that Schedule
45
(farmhouses), the first day in the period mentioned in
paragraph 5K(2) on which a requirement under paragraph

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Schedule 40 — Stamp duty land tax: relief from 15% rate
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5K(3) was not met in the case of the chargeable interest in
question.”
      (3)
In subsection (2A), for “Tax” substitute “Where subsection (1) applies any
tax”.
      (4)
In subsection (3) for “this section” substitute “subsection (1)”.
5
      (5)
After subsection (4) insert—
“(5)
The provisions of Schedule 10 apply to a return under subsection
(1A) as they apply to a return under section 76, but with the
adaptation that references to the effective date of the transaction are
to be read as references to the relevant date (as defined in subsection
10
(1B)).”
4
After section 81 insert—
“81ZA
Alternative finance arrangements: return where relief withdrawn
(1)
Where relief given in respect of a transaction entered into under
alternative finance arrangements is withdrawn to any extent under
15
any of paragraphs 6D, 6F, 6G or 6H of Schedule 4A (higher rate of
tax: alternative finance arrangements)—
(a)
the relevant person must deliver a return to HMRC before the
end of the period of 30 days after the date of the disqualifying
event;
20
(b)
the return must contain a self-assessment of the additional
tax chargeable as a result of the withdrawal of the relief;
(c)
the tax so chargeable is calculated by reference to the rates in
force at the effective date of the transaction in respect of
which the relief was allowed.
25
(2)
The provisions of Schedule 10 (returns, enquiries, assessments and
other matters) apply to a return under this section as they apply to a
return under section 76 (general requirement to make land
transaction return), but with the following adaptations—
(a)
references to the effective date of the transaction are to be
30
read as references to the date of the disqualifying event;
(b)
references to the purchaser are to be read as references to the
relevant person so far as that is necessary as a result of
subsection (1) of this section or section 85(3) (payment of
additional tax by relevant person where relief withdrawn).
35
(3)
In this section “the date of the disqualifying event” means the first
day in the control period on which a relevant requirement was not
met.
(4)
In subsection (3) “relevant requirement” means—
(a)
where the relief was given under paragraph 5 of Schedule 4A
40
(businesses of letting, trading in or redeveloping properties),
a requirement under paragraph 5G(3) of that Schedule;
(b)
where the relief was given under paragraph 5B of that
Schedule (trades involving making a dwelling available to
the public), a requirement under paragraph 5H(3) of that
45
Schedule;

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(c)
where the relief was given under paragraph 5C of that
Schedule (financial institutions acquiring dwellings in the
course of lending), a requirement under paragraph 5I(3) of
that Schedule;
(d)
where the relief was given under paragraph 5D of that
5
Schedule (dwellings for occupation by certain employees
etc), a requirement under paragraph 5J(3) of that Schedule;
(e)
where the relief was given under paragraph 5F of that
Schedule (farmhouses), a requirement under paragraph
5K(3) of that Schedule.
10
(5)
In subsection (3) “the control period” has the same meaning as in
paragraph 5G, 5H, 5I, 5J or 5K (as the case requires) of Schedule 4A.
(6)
In this section—
“alternative finance arrangements” means any arrangements
such as are mentioned in section 71A, 72, 72A or 73;
15
“the relevant person” means the person (other than the financial
institution) who entered into the arrangements in question.”
5
In section 85 (liability for tax), after subsection (2) insert—
“(3)
Where relief given in respect of a transaction entered into under
alternative finance arrangements is withdrawn to any extent under
20
any of paragraphs 6D, 6F, 6G and 6H of Schedule 4A (higher rate:
alternative finance arrangements)—
(a)
subsection (1) does not apply in relation to the additional tax
payable as a result of the withdrawal of the relief, and
(b)
the relevant person is liable to pay that additional tax.
25
(4)
In subsection (3) “the relevant person” means the person (other than
the financial institution) who entered into the arrangements in
question.”
6
In section 86 (payment of tax), after subsection (2) insert—
“(2A)
Tax payable as a result of a withdrawal of relief under any of
30
paragraphs 6D, 6F, 6G and 6H of Schedule 4A (higher rate:
alternative finance arrangements) must be paid not later than the
filing date for the return relating to the withdrawal (see section
81ZA(1)).”
7
In the table in section 122 (index of defined expressions), in second column
35
of the entry for “settlement”, after “paragraph 1(1)” insert “(except as
otherwise expressly provided)”.
Application of amendments
8
The amendments made by paragraphs 1 to 7 have effect in relation to
transactions with an effective date on or after the day on which this Act is
40
passed.
Transactions to which section 29 of the Scotland Act 2012 applies
9     (1)
In relation to transactions in relation to which section 29 of the Scotland Act
2012 (disapplication of UK stamp duty land tax) has effect, FA 2003 as

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Schedule 41 — Stamp duty land tax on leases
479

amended by this Schedule has effect subject to the following further
amendments.
      (2)
In section 81ZA, in subsection (6), in the definition of “alternative finance
arrangements”, omit “72, 72A”.
      (3)
In Schedule 4A—
5
(a)
in paragraph 6A—
(i)
in sub-paragraph (1)(a), omit “section 72 (land in Scotland
sold to financial institution and leased to person)”,
(ii)
omit sub-paragraph (2)(b),
(iii)
in sub-paragraph (4), omit “, 72(3)”, and
10
(iv)
in sub-paragraph (6), omit “, 72”,
(b)
omit paragraph 6B,
(c)
in paragraph 6C—
(i)
in sub-paragraph (1), omit “or 6B (“the modifying
paragraph”)” and for “in the modifying paragraph”
15
substitute “in paragraph 6A”, and
(ii)
accordingly, in the heading omit “and 6B”,
(d)
in paragraph 6D—
(i)
in sub-paragraph (1), omit “or 6B(3)”,
(ii)
in sub-paragraph (3)(a), omit “and (6)”,
20
(iii)
in sub-paragraph (5)(b), omit “or 72(1)(c)”,
(iv)
omit sub-paragraph (6), and
(v)
in sub-paragraph (7), in the definition of “relevant person”,
omit “, 72(1), 72A(1)”,
(e)
in paragraph 6E(4)(b), for “sub-paragraph (5)(a) or (6)(a) of
25
paragraph 6D (as the case requires)” substitute “paragraph 6D(5)(a)”,
(f)
in paragraph 6F—
(i)
in sub-paragraph (1), omit “or 6B(3)”, and
(ii)
in sub-paragraph (7)(a), omit “, 72(1), 72A(1)”,
(g)
in paragraph 6G—
30
(i)
in sub-paragraph (1), omit “or 6B(3)”, and
(ii)
in sub-paragraph (9)(b), omit “72(1), 72A(1)”, and
(h)
in paragraph 6H—
(i)
in sub-paragraph (1), omit “or 6B(3), and
(ii)
in sub-paragraph (8)(b), omit “72(1), 72A(1)”.
35
Schedule 41
Section 197

Stamp duty land tax on leases
Introduction
1
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
Leases that continue after a fixed term
40
2     (1)
In Schedule 17A (further provisions about leases), paragraph 3 (leases that
continue after a fixed term) is amended as follows.

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      (2)
In sub-paragraph (3)—
(a)
after “continuation of the lease” insert “for a period (or further
period) of one year”, and
(b)
in paragraph (a), for “that term” substitute “that one year period”.
      (3)
After that sub-paragraph insert—
5
   “(3A)
But no tax or additional tax is payable in respect of a transaction as
a result of the continuation of a lease for a period (or further
period) of one year under sub-paragraph (2) if, during that one
year period, the tenant under the lease is granted a new lease of
the same or substantially the same premises in circumstances
10
where paragraph 9A applies.”
      (4)
After sub-paragraph (3A) insert—
   “(3B)
Sub-paragraph (2) is subject to paragraph 3A.”
      (5)
In sub-paragraph (4), for the words from “the day” to the end substitute “the
last day of the one year period for which the lease is continued or (as the case
15
may be) further continued.”
      (6)
After sub-paragraph (5) insert—
    “(6)
Where—
(a)
a lease would be treated as continuing for a period (or
further period) of one year under sub-paragraph (2), but
20
(b)
(ignoring that sub-paragraph) the lease actually terminates
at a time during that period,

the lease is to be treated as continuing under sub-paragraph (2)
only until that time; and the references in sub-paragraphs (3) and
(4) to that one year period are accordingly to be read as references
25
to so much of that year as ends with that time.”
3
After that paragraph insert—
“3A   (1)
This paragraph applies where—
(a)
(ignoring this paragraph) paragraph 3 would apply to
treat a lease (“the original lease”) as if it were a lease for a
30
fixed term one year longer than the original term,
(b)
during that one year period the tenant under that lease is
granted a new lease of the same or substantially the same
premises,
(c)
the term of the new lease begins during that one year
35
period, and
(d)
paragraph 9A (backdated lease granted to tenant holding
over) does not apply.
      (2)
Paragraph 3 does not apply to treat the lease as continuing after
the original term.
40
      (3)
The term of the new lease is treated for the purposes of this Part as
beginning immediately after the original term.
      (4)
Any rent which, in the absence of this paragraph, would be
payable under the original lease in respect of that one year period
is to be treated as payable under the new lease (and paragraph 1A
45
of Schedule 5 does not apply to it).

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      (5)
Where the fixed term of a lease has previously been extended (on
one or more occasions) under paragraph 3, this paragraph applies
as if references to the original term were references to the fixed
term as previously so extended.”
4
In section 87 (interest on unpaid tax), in subsection (3)—
5
(a)
after paragraph (aa) insert—
“(aaa)
in the case of an amount payable under paragraph
3(3) of Schedule 17A (leases that continue after a fixed
term) by reason of the continuation of a lease for a
period (or further period) under paragraph 3(2) or (6)
10
of that Schedule, the final day of the period (or further
period),” and
(b)
in paragraph (ab) omit “3(3) or” and “leases that continue after a
fixed term and”.
5
In section 119 (meaning of “effective date” of a transaction), in subsection (2),
15
at the appropriate place in the list insert—

“paragraph 3(4) of Schedule 17A (leases that continue after a fixed
term),”.
Agreement for lease and assignment of agreement for lease
6     (1)
Schedule 17A is amended as follows.
20
      (2)
In paragraph 12A (agreement for lease), for sub-paragraph (3) substitute—
    “(3)
Where a lease (“the actual lease”) is subsequently granted in
pursuance of the agreement, the notional lease is to be treated for
the purposes of this Part as if it were a lease granted—
(a)
on the date the agreement was substantially performed,
25
(b)
for a term which begins with that date and ends at the end
of the term of the actual lease, and
(c)
in consideration of the total rent payable over that term
and any other consideration given for the notional lease or
the actual lease.
30
     (3A)
Where sub-paragraph (3) applies the grant of the actual lease is
disregarded for the purposes of this Part except section 81A
(return or further return in consequence of later linked
transaction).
     (3B)
For the purposes of section 81A—
35
(a)
the grant of the notional lease and the grant of the actual
lease are linked (whether or not they would be linked by
virtue of section 108),
(b)
the lessee under the actual lease (rather than the lessee
under the notional lease) is liable for any tax or additional
40
tax payable in respect of the notional lease as a result of
sub-paragraph (3), and
(c)
the reference in section 81A(1)(a) to “the purchaser under
the earlier transaction” is to be read, in relation to the
notional lease, as a reference to the lessee under the actual
45
lease.”