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Finance Bill
Part 5 — SDLT, stamp duty and SDRT

43

 

66      

Unpaid remuneration and employee benefit contributions

(1)   

Section 31 of ITTOIA 2005 (relationship between rules prohibiting and

allowing deductions: trading income) is amended as follows.

(2)   

In subsection (1) (priority of relevant permissive rules over relevant

prohibitive rules), in paragraph (b) (sections to which that priority rule is

5

subject), for “sections 48 (car or motor cycle hire) and” substitute “section 36

(unpaid remuneration), section 38 (employee benefit contributions), section 48

(car or motor cycle hire) and section”.

(3)   

In subsection (3) (meaning of “relevant prohibitive rule”), after “sections”

insert “36, 38,”.

10

(4)   

Section 274 of ITTOIA 2005 (provision corresponding to section 31 of that Act

in case of property income) is amended as follows.

(5)   

In subsection (1)(b), for “sections 48 (car or motor cycle hire) and” substitute

“section 36 (unpaid remuneration), section 38 (employee benefit

contributions), section 48 (car or motor cycle hire) and section”.

15

(6)   

In subsection (3), after “sections” insert “36, 38,”.

(7)   

The amendments made by this section have effect for the tax year 2007-08 and

subsequent tax years.

Part 4

Pensions

20

67      

Abolition of contributions relief for life assurance premium contributions

Schedule 18 contains provisions denying relief for contributions made by or on

behalf of members in respect of life assurance premiums.

68      

Alternatively secured pensions etc

Schedule 19 contains provisions about alternatively secured pensions and

25

transfer lump sum death benefit etc.

69      

Miscellaneous

Schedule 20 contains miscellaneous provisions about registered pension

schemes and employer-financed retirement benefits schemes.

Part 5

30

SDLT, stamp duty and SDRT

SDLT: anti-avoidance provisions

70      

Anti-avoidance

(1)   

In FA 2003, after section 75 insert (in place of the section inserted by the Stamp

Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (S.I. 2006/

35

 
 

Finance Bill
Part 5 — SDLT, stamp duty and SDRT

44

 

3237))—

“75A    

Anti-avoidance

(1)   

This section applies where—

(a)   

one person (V) disposes of a chargeable interest and another

person (P) acquires either it or a chargeable interest deriving

5

from it,

(b)   

a number of transactions (including the disposal and

acquisition) are involved in connection with the disposal and

acquisition (“the scheme transactions”), and

(c)   

the sum of the amounts of stamp duty land tax payable in

10

respect of the scheme transactions is less than the amount that

would be payable on a notional land transaction effecting the

acquisition of V’s chargeable interest by P on its disposal by V.

(2)   

In subsection (1) “transaction” includes, in particular—

(a)   

a non-land transaction,

15

(b)   

an agreement, offer or undertaking not to take specified action,

(c)   

any kind of arrangement whether or not it could otherwise be

described as a transaction, and

(d)   

a transaction which takes place after the acquisition by P of the

chargeable interest.

20

(3)   

The scheme transactions may include, for example—

(a)   

the acquisition by P of a lease deriving from a freehold owned

or formerly owned by V;

(b)   

a sub-sale to a third person;

(c)   

the grant of a lease to a third person subject to a right to

25

terminate;

(d)   

the exercise of a right to terminate a lease or to take some other

action;

(e)   

an agreement not to exercise a right to terminate a lease or to

take some other action;

30

(f)   

the variation of a right to terminate a lease or to take some other

action.

(4)   

Where this section applies—

(a)   

any of the scheme transactions which is a land transaction shall

be disregarded for the purposes of this Part, but

35

(b)   

there shall be a notional land transaction for the purposes of this

Part effecting the acquisition of V’s chargeable interest by P on

its disposal by V.

(5)   

The chargeable consideration on the notional transaction mentioned in

subsections (1)(c) and (4)(b) is the largest amount (or aggregate

40

amount)—

(a)   

given by or on behalf of any one person by way of consideration

for the scheme transactions, or

(b)   

received by or on behalf of V (or a person connected with V

within the meaning of section 839 of the Taxes Act 1988) by way

45

of consideration for the scheme transactions.

(6)   

The effective date of the notional transaction is—

 
 

Finance Bill
Part 5 — SDLT, stamp duty and SDRT

45

 

(a)   

the last date of completion for the scheme transactions, or

(b)   

if earlier, the last date on which a contract in respect of the

scheme transactions is substantially performed.

(7)   

This section does not apply where subsection (1)(c) is satisfied only by

reason of—

5

(a)   

sections 71A to 73, or

(b)   

a provision of Schedule 9.

75B     

Anti-avoidance: incidental transactions

(1)   

In calculating the chargeable consideration on the notional transaction

for the purposes of section 75A(5), consideration for a transaction shall

10

be ignored if or in so far as the transaction is merely incidental to the

transfer of the chargeable interest from V to P.

(2)   

A transaction is not incidental to the transfer of the chargeable interest

from V to P—

(a)   

if or in so far as it forms part of a process, or series of

15

transactions, by which the transfer is effected,

(b)   

if the transfer of the chargeable interest is conditional on the

completion of the transaction, or

(c)   

if it is of a kind specified in section 75A(3).

(3)   

A transaction may, in particular (but subject to subsection (2)), be

20

incidental if or in so far as it is undertaken only for a purpose relating

to—

(a)   

the construction of a building on property to which the

chargeable interest relates,

(b)   

the sale or supply of anything other than land, or

25

(c)   

a loan to P secured by a mortgage, or any other provision of

finance to enable P, or another person, to pay for part of a

process, or series of transactions, by which the chargeable

interest transfers from V to P.

(4)   

The exclusion required by subsection (1) shall be effected by way of just

30

and reasonable apportionment if necessary.

75C     

Anti-avoidance: supplemental

(1)   

A transfer of shares or securities shall be ignored for the purposes of

section 75A if but for this subsection it would be the first of a series of

scheme transactions.

35

(2)   

The notional transaction under section 75A attracts any relief under this

Part which it would attract if it were an actual transaction (subject to the

terms and restrictions of the relief).

(3)   

The notional transaction under section 75A is a land transaction

entered into for the purposes of or in connection with the transfer of an

40

undertaking or part for the purposes of paragraphs 7 and 8 of Schedule

7, if any of the scheme transactions is entered into for the purposes of

or in connection with the transfer of the undertaking or part.

(4)   

In the application of section 75A(5) no account shall be taken of any

amount paid by way of consideration in respect of a transaction to

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Finance Bill
Part 5 — SDLT, stamp duty and SDRT

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which any of sections 60, 61, 63, 64, 65, 66, 67, 69, 71, 74 and 75, or a

provision of Schedule 6A or 8, applies.

(5)   

Section 53 applies to the notional transaction under section 75A.

(6)   

Paragraph 5 of Schedule 4 applies to the notional transaction under

section 75A.

5

(7)   

For the purposes of section 75A—

(a)   

an interest in a partnership is a chargeable interest in so far as it

concerns land owned by the partnership, and

(b)   

where V or P is a partnership, Part 3 of Schedule 15 applies to

the notional transaction as to the transfer of a chargeable

10

interest from or to a partnership.

(8)   

For the purposes of section 75A a reference to an amount of

consideration includes a reference to the value of consideration given

as money’s worth.

(9)   

Stamp duty land tax paid in respect of a land transaction which is to be

15

disregarded by virtue of section 75A(4)(a) is taken to have been paid in

respect of the notional transaction by virtue of section 75A(4)(b).

(10)   

The Treasury may by order provide for section 75A not to apply in

specified circumstances.

(11)   

An order under subsection (10) may include incidental, consequential

20

or transitional provision.”

(2)   

The amendment made by subsection (1) has effect in respect of disposals and

acquisitions if the disposal mentioned in new section 75A(1)(a) (inserted by

that subsection) takes place on or after 6th December 2006.

(3)   

But the transitional provisions of sub-paragraphs (2) to (5) of paragraph 1 of

25

the Schedule to the Stamp Duty Land Tax (Variation of the Finance Act 2003)

Regulations 2006 (S.I. 2006/3237) continue to have effect in relation to this

section as in relation to that paragraph.

71      

Partnerships

(1)   

Schedule 15 to FA 2003 (stamp duty land tax: partnerships) is amended as

30

follows.

(2)   

A reference in this section to a provision of that Schedule is to the provision as

it had effect before variation by the Stamp Duty Land Tax (Variation of the

Finance Act 2003) Regulations 2006.

(3)   

In Step Two of paragraph 12(1) (transfer to partnership: how to calculate the

35

“sum of the lower proportions”)—

(a)   

in paragraph (b), for “or is connected with the relevant owner”

substitute “or is an individual connected with the relevant owner”, and

(b)   

insert at the end—

   

“(If there is no relevant owner with a corresponding partner, the

40

sum of the lower proportions is nil.)”

 
 

Finance Bill
Part 5 — SDLT, stamp duty and SDRT

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(4)   

In paragraph 12, after sub-paragraph (2) insert—

    “(3)  

For the purpose of paragraph (b) of Step 2 a company is to be treated

as an individual connected with the relevant owner in so far as it—

(a)   

holds property as trustee, and

(b)   

is connected with the relevant owner only because of section

5

839(3) of the Taxes Act 1988.”

(5)   

Omit paragraph 13 (transfer to partnership where all partners are companies).

(6)   

In paragraph 14 (transfer of interest in property-investment partnership)—

(a)   

omit sub-paragraph (1)(b), and

(b)   

insert at the end—

10

    “(9)  

An interest in respect of the transfer of which this paragraph

applies shall be treated as a chargeable interest for the

purposes of paragraph 3(1) of Schedule 7 to the extent that

the relevant partnership property consists of a chargeable

interest.”,

15

   

and in the italic cross-heading before it, omit “for consideration”.

(7)   

In Step Two of paragraph 20(1) (transfer from partnership: how to calculate the

“sum of the lower proportions”)—

(a)   

in paragraph (b), for “or was connected with the relevant owner”

substitute “or was an individual connected with the relevant owner”,

20

and

(b)   

insert at the end—

   

“(If there is no relevant owner with a corresponding partner, the

sum of the lower proportions is nil.)”

(8)   

In paragraph 20, after sub-paragraph (2) insert—

25

    “(3)  

For the purpose of paragraph (b) of Step 2 a company is to be treated

as an individual connected with the relevant owner in so far as it—

(a)   

holds property as trustee, and

(b)   

is connected with the relevant owner only because of section

839(3) of the Taxes Act 1988.”

30

(9)   

After paragraph 27 insert—

“27A  (1)  

This paragraph applies where in calculating the sum of the lower

proportions in relation to a transaction (in accordance with

paragraph 12)—

(a)   

a company (“the connected company”) would have been a

35

corresponding partner of a relevant owner (“the original

owner”) but for the fact that paragraph (b) of Step Two

includes connected persons only if they are individuals, and

(b)   

the connected company and the original owner are members

of the same group.

40

      (2)  

The charge in respect of the transaction shall be reduced to the

amount that would have been payable had the connected company

been a corresponding partner of the original owner for the purposes

of calculating the sum of the lower proportions.

 
 

Finance Bill
Part 5 — SDLT, stamp duty and SDRT

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      (3)  

The provisions of Part 1 of Schedule 7 apply to group relief under

sub-paragraph (2) above as to group relief under paragraph 1(1) of

Schedule 7, but—

(a)   

with the omission of paragraph 2(2)(a),

(b)   

with the substitution for “the purchaser” in paragraph 3(1)(a)

5

of “a partner who was, at the effective date of the transaction,

a partner and a member of the same group as the transferor

(“the relevant partner”)”, and

(c)   

with the other modifications specified in paragraph 27(3) to

(6) above.”

10

(10)   

For paragraph 36 substitute—

“36        

For the purposes of this Part of this Schedule, where a person

acquires or increases a partnership share there is a transfer of an

interest in the partnership (to that partner and from the other

partners).”

15

(11)   

In paragraph 39 (“connected persons”), insert at the end—

    “(3)  

As applied by sub-paragraph (1) for the purposes of paragraph 12 or

20, that section has effect with the omission of subsection (3)(c)

(trustee connected with settlement).”

(12)   

In Schedule 16 to FA 2003 (trusts and powers)—

20

(a)   

in paragraph 3(1) (bare trust), after “a chargeable interest” insert “or an

interest in a partnership”, and

(b)   

in paragraph 4 (trustees of settlement), after “a chargeable interest”

insert “or an interest in a partnership”.

(13)   

The amendments made by subsections (1) to (11) have effect in respect of

25

transfers occurring on or after the day on which this Act is passed.

(14)   

The amendment made by subsection (12) has effect in respect of acquisitions

occurring on or after the day on which this Act is passed.

(15)   

An amendment made by this section replaces, to the extent provided for by

subsections (13) and (14), any variation made by the Stamp Duty Land Tax

30

(Variation of the Finance Act 2003) Regulations 2006 (S.I. 2006/3237).

(16)   

Despite subsections (13) to (15), the transitional provisions of sub-paragraphs

(8) to (10) of paragraph 2 of the Schedule to the Stamp Duty Land Tax

(Variation of the Finance Act 2003) Regulations 2006 continue to have effect in

relation to the amendments made by this section as in relation to that

35

paragraph.

Reliefs in relation to shares etc

72      

Exemptions: intermediaries, repurchases etc

Schedule 21 contains provision in relation to exemptions from stamp duty and

stamp duty reserve tax in cases involving intermediaries, repurchases, stock

40

lending or recognised investment exchanges.

 
 

 
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