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Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 1 — Amendments coming into force in accordance with paragraph 16

146

 

(a)   

in sub-paragraph (1)(b) for “the first and second conditions”

substitute “all the conditions”, and

(b)   

after sub-paragraph (5) insert—

   “(5A)  

The third condition is that the undertaking or part

acquired by the acquiring company has as its main activity

5

the carrying on of a trade that does not consist wholly or

mainly of dealing in chargeable interests.

           

In this sub-paragraph “trade” has the same meaning as in

the Taxes Act 1988.”

9          

In paragraph 9 of Schedule 7 (withdrawal of reconstruction or acquisition

10

relief) for sub-paragraph (2) substitute—

    “(2)  

The amount chargeable is the tax that would have been chargeable

in respect of the relevant transaction but for reconstruction or

acquisition relief if the chargeable consideration for that

transaction had been an amount equal to—

15

(a)   

the market value of the subject-matter of the transaction,

and

(b)   

if the acquisition was the grant of a lease at a rent, that rent,

           

or, as the case may be, an appropriate proportion of the tax that

would have been so chargeable.”

20

Withdrawal of money etc from partnership after transfer of chargeable interest

10         

In Schedule 15 (partnerships) after paragraph 17 insert—

“Withdrawal of money etc from partnership after transfer of chargeable interest

17A   (1)  

This paragraph applies where—

(a)   

there is a transfer of a chargeable interest to a partnership

25

(“the land transfer”);

(b)   

the land transfer falls within paragraph (a), (b) or (c) of

paragraph 10(1);

(c)   

during the period of three years beginning with the date of

the land transfer, a qualifying event occurs.

30

      (2)  

A qualifying event is—

(a)   

a withdrawal from the partnership of money or money’s

worth which does not represent income profit by the

relevant person—

(i)   

withdrawing capital from his capital account,

35

(ii)   

reducing his interest, or

(iii)   

ceasing to be a partner, or

(b)   

in a case where the relevant person has made a loan to the

partnership—

(i)   

the repayment (to any extent) by the partnership of

40

the loan, or

(ii)   

a withdrawal by the relevant person from the

partnership of money or money’s worth which

does not represent income profit.

      (3)  

For this purpose the relevant person is—

45

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 1 — Amendments coming into force in accordance with paragraph 16

147

 

(a)   

where the land transfer falls within paragraph 10(1)(a) or

(b), the person who makes the land transfer, and

(b)   

where the land transfer falls within paragraph 10(1)(c), the

partner concerned or a person connected with him.

      (4)  

The qualifying event—

5

(a)   

shall be taken to be a land transaction, and

(b)   

is a chargeable transaction.

      (5)  

The partners shall be taken to be the purchasers under the

transaction.

      (6)  

Paragraphs 6 to 8 (responsibility of partners) have effect in relation

10

to the transaction.

      (7)  

The chargeable consideration for the transaction shall be taken to

be—

(a)   

in a case falling within sub-paragraph (2)(a), equal to the

value of the money or money’s worth withdrawn from the

15

partnership, or

(b)   

in a case falling within sub-paragraph (2)(b)(i), equal to the

amount repaid, and

(c)   

in a case falling within sub-paragraph (2)(b)(ii), equal to so

much of the value of the money or money’s worth

20

withdrawn from the partnership as does not exceed the

amount of the loan,

           

but (in any case) shall not exceed the market value, as at the

effective date of the land transfer, of the chargeable interest

transferred by the land transfer, reduced by any amount

25

previously chargeable to tax.”

Grant of lease to bare trustee

11         

For paragraph 3 of Schedule 16 substitute—

“Bare trustee

3     (1)  

Subject to sub-paragraph (2), where a person acquires a

30

chargeable interest as bare trustee, this Part applies as if the

interest were vested in, and the acts of the trustee in relation to it

were the acts of, the person or persons for whom he is trustee.

      (2)  

Sub-paragraph (1) does not apply in relation to the grant of a lease.

      (3)  

Where a lease is granted to a person as bare trustee, he is treated

35

for the purposes of this Part, as it applies in relation to the grant of

the lease, as purchaser of the whole of the interest acquired.

      (4)  

Where a lease is granted by a person as bare trustee, he is to be

treated for the purposes of this Part, as it applies in relation to the

grant of the lease, as vendor of the whole of the interest disposed

40

of.”

12         

In paragraph 11 of Schedule 17A (cases where assignment of lease treated as

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 1 — Amendments coming into force in accordance with paragraph 16

148

 

grant of lease), for sub-paragraph (1) substitute—

    “(1)  

This paragraph applies where the grant of a lease is exempt from

charge by virtue of any of the provisions specified in sub-

paragraph (3).”

Variation of lease

5

13         

In paragraph 15A of Schedule 17A (leases: reduction of rent or term)—

(a)   

after sub-paragraph (1) insert—

   “(1A)  

Where any consideration in money or money’s worth

(other than an increase in rent) is given by the lessee for

any variation of a lease, other than a variation of the

10

amount of the rent or of the term of the lease, the variation

is treated for the purposes of this Part as an acquisition of

a chargeable interest by the lessee.”, and

(b)   

for the heading preceding that paragraph substitute “Reduction of

rent or term or other variation of lease”.

15

Loan or deposit in connection with grant or assignment of lease

14         

After paragraph 18 of Schedule 17A insert—

“Loan or deposit in connection with grant or assignment of lease

18A   (1)  

Where, under arrangements made in connection with the grant of

a lease—

20

(a)   

the lessee, or any person connected with him or acting on

his behalf, pays a deposit, or makes a loan, to any person,

and

(b)   

the repayment of all or part of the deposit or loan is

contingent on anything done or omitted to be done by the

25

lessee or on the death of the lessee,

           

the amount of the deposit or loan (disregarding any repayment) is

to be taken for the purposes of this Part to be consideration other

than rent given for the grant of the lease.

      (2)  

Where, under arrangements made in connection with the

30

assignment of a lease—

(a)   

the assignee, or any person connected with him or acting

on his behalf, pays a deposit, or makes a loan, to any

person, and

(b)   

the repayment of all or part of the deposit or loan is

35

contingent on anything done or omitted to be done by the

assignee or on the death of the assignee,

           

the amount of the deposit or loan (disregarding any repayment) is

to be taken for the purposes of this Part to be consideration other

than rent given for the assignment of the lease.

40

      (3)  

Sub-paragraph (1) or (2) does not apply in relation to a deposit if

the amount that would otherwise fall within the sub-paragraph in

question in relation to the grant or (as the case requires)

assignment of the lease is not more than twice the relevant

maximum rent.

45

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 1 — Amendments coming into force in accordance with paragraph 16

149

 

      (4)  

The relevant maximum rent is—

(a)   

in relation to the grant of a lease, the highest amount of

rent payable in respect of any consecutive twelve month

period in the first five years of the term;

(b)   

in relation to the assignment of a lease, the highest amount

5

of rent payable in respect of any consecutive twelve month

period in the first five years of the term remaining

outstanding as at the date of the assignment,

           

the highest amount of rent being determined (in either case) in the

same way as the highest amount of rent mentioned in paragraph

10

7(3).

      (5)  

Tax is not chargeable by virtue of this paragraph—

(a)   

merely because of paragraph 9(2) of Schedule 5 (which

excludes the 0% band in the Tables in section 55(2) in cases

where the relevant rental figure exceeds £600 a year), or

15

(b)   

merely because of paragraph 5(4)(b), 6(6)(b), 9(4)(b) or

10(6)(b) of Schedule 6 (which make similar provision in

relation to land which is wholly or partly residential

property and is wholly or partly situated in a

disadvantaged area).

20

      (6)  

Section 839 of the Taxes Act 1988 (connected persons) has effect for

the purposes of this paragraph.”

15         

In section 80 (adjustment where contingency ceases or consideration is

ascertained) after subsection (4) insert—

“(4A)   

Where the transaction (“the relevant transaction”) is the grant or

25

assignment of a lease, no claim may be made under subsection (4)—

(a)   

in respect of the repayment (in whole or part) of any loan or

deposit that is treated by paragraph 18A of Schedule 17A as

being consideration given for the relevant transaction, or

(b)   

in respect of the refund of any of the consideration given for

30

the relevant transaction, in a case where the refund—

(i)   

is made under arrangements that were made in

connection with the relevant transaction, and

(ii)   

is contingent on the determination or assignment of

the lease or on the grant of a chargeable interest out of

35

the lease.”

Commencement

16    (1)  

Subject to sub-paragraph (7), paragraphs 3 to 7 have effect where the

effective date of the relevant transaction (within the meaning of paragraph

3 or 4A of Schedule 7 to FA 2003) is after 19th May 2005.

40

      (2)  

Subject to sub-paragraph (7), paragraph 9 has effect where the effective date

of the relevant transaction (within the meaning of paragraph 9 of Schedule

7 to FA 2003) is after 19th May 2005.

      (3)  

Subject to sub-paragraph (7), paragraph 10 has effect where the effective

date of the transaction transferring the chargeable interest to the partnership

45

is after 19th May 2005.

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 2 — Amendments coming into force in accordance with paragraph 22

150

 

      (4)  

Subject to sub-paragraph (7), paragraphs 11 and 12 have effect where the

effective date of the land transaction consisting of the grant of the lease is

after 19th May 2005.

      (5)  

Subject to sub-paragraph (7), the amendments made by the other provisions

of this Part of this Schedule have effect in relation to any transaction of which

5

the effective date is after 19th May 2005.

      (6)  

In sub-paragraphs (7) and (8) “the specified date” means—

(a)   

in relation to the amendments made by paragraphs 4(a) and 9, 19th

May 2005, and

(b)   

in relation to the amendments made by the other provisions of this

10

Part of this Schedule, 16th March 2005.

      (7)  

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 the

specified date, or

15

(b)   

subject to sub-paragraph (8), in relation to any other transaction

which is effected in pursuance of a contract entered into on or before

the specified date.

      (8)  

The exclusion by sub-paragraph (7)(b) of transactions effected in pursuance

of contracts entered into on or before the specified date does not apply—

20

(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

25

(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.

      (9)  

In this paragraph “assignment”, “effective date” and “substantially

performed” have the same meaning as in Part 4 of FA 2003.

30

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.

35

Transfers involving public bodies

18         

In section 66 of FA 2003 (transfers involving public bodies) after subsection

(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

40

(Northern Ireland) Order 1986.”

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 2 — Amendments coming into force in accordance with paragraph 22

151

 

Group relief: avoidance arrangements

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

5

(b)   

forms 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.”

10

Acquisition relief: avoidance arrangements

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

15

person or persons.

           

The reference to control shall be construed in accordance

with section 416 of the Taxes Act 1988.”, and

(b)   

after sub-paragraph (5A) (inserted by paragraph 8 of this Schedule)

insert—

20

   “(5B)  

The fourth condition is that the acquisition is effected for

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,

25

capital gains tax or tax under this Part.”

     (5C)  

In this paragraph “arrangements” include any scheme,

agreement or understanding, whether or not legally

enforceable.”

Stamp duty on transfers of partnership interests

30

21    (1)  

In Schedule 15 (stamp duty land tax: partnerships), paragraph 33 (which

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

35

Schedule 13 to the Finance Act 1999 (transfer on sale) is, apart from

this paragraph, chargeable on an instrument effecting a transfer of

an interest in a partnership.

     (1A)  

If the relevant partnership property does not include any stock or

marketable securities, no stamp duty shall (subject to sub-

40

paragraph (8)) be chargeable on the instrument.”

      (3)  

In sub-paragraph (3)—

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 2 — Amendments coming into force in accordance with paragraph 22

152

 

(a)   

at the beginning insert “If the relevant partnership property includes

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—

5

“(b)   

the consideration for the transfer were equal to the

appropriate proportion of the net market value of

that stock and those securities immediately after

the transfer.”

      (4)  

After sub-paragraph (3) insert—

10

   “(3A)  

The “relevant partnership property”, in relation to a transfer of an

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).

15

      (6)  

In sub-paragraph (5), for “That” substitute “The appropriate”.

Commencement

22    (1)  

Subject to sub-paragraph (2), paragraphs 18 to 20 have effect in relation to

any transaction of which the effective date is on or after the day on which

this Act is passed.

20

      (2)  

Paragraphs 19 and 20 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

(b)   

(subject to sub-paragraph (3)) in relation to any other transaction

25

which is effected in pursuance of a contract entered into on or before

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

30

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

(relating to the whole or part of the subject-matter of the contract) as

35

a result of which a person other than the purchaser under the

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.

      (5)  

In this paragraph “assignment”, “effective date” and “substantially

40

performed” have the same meaning as in Part 4 of FA 2003.

 

 

 
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