Finance Bill

House of Commons

Session 2004 - 05
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Finance Bill

Finance Bill
Schedule 17 — Stamp duty land tax: miscellaneous amendments
Part 2 — Amendments coming into force in accordance with paragraph 22
286

(ii)
is contingent on the determination or assignment of
the lease or on the grant of a chargeable interest out of
the lease.”
Commencement
16    (1)
Subject to sub-paragraph (5), paragraphs 4 to 8 have effect where the
5
effective date of the relevant transaction (within the meaning of paragraph
3 or 4A of Schedule 7 to FA 2003) is after 16th March 2005.
      (2)
Subject to sub-paragraph (5), paragraph 10 has effect where the effective
date of the transaction transferring the chargeable interest to the partnership
is after 16th March 2005.
10
      (3)
Subject to sub-paragraph (5), paragraphs 11 and 12 have effect where the
effective date of the land transaction consisting of the grant of the lease is
after 16th March 2005.
      (4)
Subject to sub-paragraph (5), the amendments made by the other provisions
of this Part of this Schedule have effect in relation to any transaction of which
15
the effective date is after 16th March 2005.
      (5)
The amendments made by this Part of this Schedule do not have effect—
(a)
in relation to any transaction which is effected in pursuance of a
contract entered into and substantially performed on or before 16th
March 2005, or
20
(b)
subject to sub-paragraph (6), in relation to any other transaction
which is effected in pursuance of a contract entered into on or before
that date.
      (6)
The exclusion by sub-paragraph (5)(b) of transactions effected in pursuance
of contracts entered into on or before 16th March 2005 does not apply—
25
(a)
if there is any variation of the contract or assignment of rights under
the contract after that date,
(b)
if the transaction is effected in consequence of the exercise after that
date of any option, right of pre-emption or similar right, or
(c)
if after that date there is an assignment, subsale or other transaction
30
(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 to him.
      (7)
In this paragraph “effective date” and “substantially performed” have the
same meaning as in Part 4 of FA 2003.
35
Part 2
Amendments coming into force in accordance with paragraph 22
Introduction
17
Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this
Part of this Schedule.
40
Transfers involving public bodies
18
In section 66 of FA 2003 (transfers involving public bodies) after subsection

Finance Bill
Schedule 17 — Stamp duty land tax: miscellaneous amendments
Part 2 — Amendments coming into force in accordance with paragraph 22
287

(5) insert—
“(6)
In this section “company” means a company as defined by section
735(1) of the Companies Act 1985 or Article 3(1) of the Companies
(Northern Ireland) Order 1986.”
Group relief: avoidance arrangements
5
19
In paragraph 2 of Schedule 7 (restrictions on availability of group relief) after
sub-paragraph (4) insert—
   “(4A)
Group 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
10
one of the main purposes, is the avoidance of liability to
tax.

“Tax” here means stamp duty, income tax, corporation tax, capital
gains tax or tax under this Part.”
Acquisition relief: avoidance arrangements
15
20
In paragraph 8 of Schedule 7 (acquisition relief)—
(a)
for sub-paragraph (5) substitute—
    “(5)
For this purpose companies are associated if one has
control of the other or both are controlled by the same
person or persons.
20

The reference to control shall be construed in accordance
with section 416 of the Taxes Act 1988.”
(b)
after sub-paragraph (5A) (as inserted by paragraph 9 of this
Schedule) insert—
   “(5B)
The fourth condition is that the acquisition is effected for
25
bona fide commercial reasons and does not form part of
arrangements of which the main purpose, or one of the
main purposes, is the avoidance of liability to tax.

“Tax” here means stamp duty, income tax, corporation tax,
capital gains tax or tax under this Part.”
30
     (5C)
In this paragraph “arrangements” include any scheme,
agreement or understanding, whether or not legally
enforceable.”
Stamp duty on transfers of partnership interests
21    (1)
In Schedule 15 (stamp duty land tax: partnerships), paragraph 33 (which
35
relates to stamp duty on transfers of partnership interests) is amended as
follows.
      (2)
For sub-paragraphs (1) and (2) substitute—
    “(1)
This paragraph applies where stamp duty under Part 1 of
Schedule 13 to the Finance Act 1999 (transfer on sale) is, apart from
40
this paragraph, chargeable on an instrument effecting a transfer of
an interest in a partnership.

Finance Bill
Schedule 17 — Stamp duty land tax: miscellaneous amendments
Part 2 — Amendments coming into force in accordance with paragraph 22
288

     (1A)
If the relevant partnership property does not include any stock or
marketable securities, no stamp duty shall (subject to sub-
paragraph (8)) be chargeable on the instrument.”
      (3)
In sub-paragraph (3)—
(a)
at the beginning insert “If the relevant partnership property includes
5
stock or marketable securities, “,
(b)
in paragraph (a), for the words from “the stock” to “property”
substitute “that stock and those securities”, and
(c)
for paragraph (b) substitute—
“(b)
the consideration for the transfer were equal to the
10
appropriate proportion of the net market value of
that stock and those securities immediately after
the transfer.”
      (4)
After sub-paragraph (3) insert—
   “(3A)
The “relevant partnership property”, in relation to a transfer of an
15
interest in a partnership, is the partnership property immediately
after the transfer, other than any partnership property that was
transferred to the partnership in connection with the transfer.”
      (5)
Omit sub-paragraph (4).
      (6)
In sub-paragraph (5), for “That” substitute “The appropriate”.
20
Commencement
22    (1)
Subject to sub-paragraph (2), paragraphs 18 to 20 have effect in relation to
any transaction of which the effective date (within the meaning of Part 4 of
FA 2003) is on or after the day on which this Act is passed.
      (2)
Paragraphs 19 and 20 do not have effect—
25
(a)
in relation to any transaction which is effected in pursuance of a
contract entered into and substantially performed (within the
meaning of Part 4 of FA 2003) on or before 16th March 2005, or
(b)
(subject to sub-paragraph (3)) in relation to any other transaction
which is effected in pursuance of a contract entered into on or before
30
that date.
      (3)
The exclusion by sub-paragraph (2)(b) of transactions effected in pursuance
of contracts entered into on or before 16th March 2005 does not apply—
(a)
if there is any variation of the contract or assignment of rights under
the contract after that date,
35
(b)
if the transaction is effected in consequence of the exercise after that
date of any option, right of pre-emption or similar right, or
(c)
if 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
40
contract becomes entitled to call for a conveyance to him.
      (4)
Paragraph 21 has effect in relation to any instrument executed on or after the
day on which this Act is passed.

Finance Bill
Schedule 18 — Stamp duty land tax and stamp duty: removal of disadvantaged areas relief for non-residential property
289

Schedule 18
Section 144

Stamp duty land tax and stamp duty: removal of disadvantaged areas relief
for non-residential property
Stamp duty land tax
1     (1)
Schedule 6 to FA 2003 (disadvantaged areas relief) is amended as follows.
5
      (2)
In paragraph 3 (land wholly situated in a disadvantaged area: introduction),
after “if” insert “(a)” and at the end insert “, and
(b)
the land is wholly or partly residential property”.
      (3)
Omit paragraph 4 (land wholly situated in a disadvantaged area: exemption
from charge where land all non-residential).
10
      (4)
In paragraph 6 (land wholly situated in a disadvantaged area: cases where
land partly non-residential and partly residential)—
(a)
for the first sentence of sub-paragraph (1) substitute—

“This paragraph applies, where the land is partly non-
residential property and partly residential property, in
15
relation to the consideration attributable to land that is
residential property.”;
(b)
in the second sentence of that sub-paragraph omit “land that is non-
residential property or”;
(c)
omit sub-paragraphs (2) and (3).
20
      (5)
In paragraph 7 (land partly situated in a disadvantaged area: introduction),
in sub-paragraph (1) after “if” insert “(a)” and at the end of that sub-
paragraph insert “, and
(b)
the land situated in a disadvantaged area is wholly or partly
residential property”.
25
      (6)
Omit paragraph 8 (land partly situated in a disadvantaged area: exemption
from charge for part so situated if all non-residential).
      (7)
In paragraph 10 (land partly situated in a disadvantaged area: cases where
part so situated is partly non-residential and partly residential)—
(a)
for the first sentence of sub-paragraph (1) substitute—
30

“This paragraph applies, where the land situated in a
disadvantaged area is partly non-residential property and
partly residential property, in relation to the consideration
attributable to land that is residential property.”;
(b)
in the second sentence of that sub-paragraph omit “land that is non-
35
residential property or”;
(c)
omit sub-paragraphs (2) and (3).
Stamp duty
2     (1)
The Stamp Duty (Disadvantaged Areas) (Application of Exemptions)
Regulations 2003 (S.I. 2003/1056) are amended as follows.
40

Finance Bill
Schedule 18 — Stamp duty land tax and stamp duty: removal of disadvantaged areas relief for non-residential property
290

      (2)
After regulation 2 insert—
“2A
Disapplication of exemptions conferred by section 92 or by Schedule
30 where all of land is non-residential property
An exemption conferred by section 92 or by Schedule 30 shall not
apply where none of the land in question is residential property.”.
5
      (3)
In regulation 5 (application of exemptions conferred by section 92 or by
Schedule 30 where land only partly residential property), after paragraph (3)
insert—
“(3A)
An exemption conferred by section 92 or by Schedule 30 shall not
apply in relation to any duty chargeable in respect of relevant
10
consideration, or the rate or average rate of rent, attributed to the
land in question to the extent that it is not residential property.”.
3
The insertion by paragraph 2 of provisions into the Stamp Duty
(Disadvantaged Areas) (Application of Exemptions) Regulations 2003 is
without prejudice to the power to amend or revoke those provisions by
15
further regulations under section 92A of FA 2001.
Commencement and transitional provisions
4     (1)
Subject to sub-paragraph (2), paragraph 1 applies in relation to any
transaction of which the effective date is after 16th March 2005.
      (2)
That paragraph does not apply—
20
(a)
in relation to any transaction that is effected in pursuance of a
contract entered into and substantially performed on or before 16th
March 2005, or
(b)
(subject to sub-paragraph (3)) in relation to any other transaction that
is effected in pursuance of a contract entered into on or before that
25
date.
      (3)
The exclusion by sub-paragraph (2)(b) of transactions effected in pursuance
of contracts entered into on or before 16th March 2005 does not apply—
(a)
if there is any variation of the contract or assignment of rights under
the contract after that date,
30
(b)
if the transaction is effected in consequence of the exercise after that
date of any option, right of pre-emption or similar right, or
(c)
if 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
35
contract becomes entitled to call for a conveyance to him.
      (4)
In this paragraph “effective date” and “substantially performed” have the
same meaning as in Part 4 of FA 2003.
5     (1)
Subject to sub-paragraph (2), paragraph 2 applies in relation to instruments
executed after 16th March 2005.
40
      (2)
That paragraph does not apply in relation to an instrument giving effect to
a contract entered into on or before 16th March 2005, unless—
(a)
the instrument is made in consequence of the exercise after that date
of any option, right of pre-emption or similar right, or

Finance Bill
Schedule 19 — Pension schemes etc.
291

(b)
the instrument transfers the property in question to, or vests it in, a
person other than the purchaser under the contract, because of an
assignment (or, in Scotland, assignation) or further contract made
after that date.
Schedule 19
5
Section 150

Pension schemes etc.
Introduction
1
Part 4 of FA 2004 (pension schemes etc.) is amended in accordance with
paragraphs 2 to 58.
Deferred annuities
10
2
In section 153(8) (deferred annuity contract to be registered pension
scheme), after “contract” insert “made with an insurance company”.
Orders for return of unauthorised payments
3
In section 153 (registration of pension schemes), after subsection (8) insert—
“(8A)
Where an order has been made under section 19(4) or 21(2)(a) of the
15
Pensions Act 2004 or Article 15(4) or 17(2)(a) of the Pensions
(Northern Ireland) Order 2005 (restitution by order of court or
Pensions Regulator) that property or money be transferred, or a sum
be paid, towards an annuity contract made with an insurance
company, the annuity contract is to be treated as having become a
20
registered pension scheme on the day on which it is made.”
4
After section 266 insert—
“Relief from liability in respect of returned unauthorised member payments
266A
Member’s liability
(1)
This section applies where—
25
(a)
a liability to the unauthorised payments charge, or to both the
unauthorised payments charge and the unauthorised
payments surcharge, has arisen in respect of an unauthorised
member payment, and
(b)
property or money is transferred, or a sum paid, towards a
30
registered pension scheme pursuant to an order under
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 (restitution by order of court or Pensions Regulator) as
a result of the unauthorised member payment.
35
(2)
The member of the registered pension scheme to or in respect of
whom the unauthorised member payment was made (or, if it was
paid after his death, the recipient) may claim relief from—
(a)
the relevant proportion of the unauthorised payments
charge, and
40

Finance Bill
Schedule 19 — Pension schemes etc.
292

(b)
if a liability to the unauthorised payments surcharge has
arisen and subsection (4) is satisfied, the relevant proportion
of the unauthorised payments surcharge.
(3)
The claim must be made within the period of one year beginning
with the day on which the property or money is transferred, or the
5
sum paid.
(4)
This subsection is satisfied if no part of the unauthorised member
payment and no asset or sum representing it—
(a)
has been received by (or on behalf of) the member or a person
connected with the member, or
10
(b)
has been held for more than 180 days by a person or
succession of persons, other than the member or a person
connected with the member, involved in any transaction by
which the unauthorised member payment was made.
(5)
The relevant proportion of the unauthorised payments charge or the
15
unauthorised payments surcharge is—
where—
ASO is the amount subject to the order, that is the aggregate of
the market value of any property and the amount of any
money transferred, or the amount of the sum paid, towards a
20
registered pension scheme pursuant to the order under
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 in respect of the unauthorised member payment, and
UMP is the amount of the unauthorised member payment.
25
(6)
But if ASO is greater than UMP, the relevant proportion of the
unauthorised payments charge or the unauthorised payments
surcharge is the whole of it.
(7)
Section 839 of ICTA (connected persons) applies for the purposes of
this section.
30
266B
Scheme’s liability
(1)
This section applies where—
(a)
the scheme administrator of a registered pension scheme has
become liable to the scheme sanction charge in respect of an
unauthorised member payment, and
35
(b)
property or money is transferred, or a sum paid, towards a
registered pension scheme pursuant to an order under
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 (restitution by order of court or Pensions Regulator) as
40
a result of the unauthorised member payment.
(2)
The scheme administrator may, within the period of one year
beginning with the day on which the property or money is
transferred, or the sum paid, claim relief from the relevant
proportion of the scheme sanction charge.
45