Finance Bill

House of Commons

Session 2006 - 07
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Finance Bill

Finance Bill
Part 5 — SDLT, stamp duty and SDRT
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(17)
Despite subsections (13) to (16), 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 (S.I. 2006/3237) continue
to have effect in relation to the amendments made by this section as in relation
to that paragraph.
5
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
lending or recognised investment exchanges.
10
73
Acquisition relief: disregard of company holding own shares
(1)
In section 75 of FA 1986 (relief on acquisition of undertaking of company in
pursuance of scheme for reconstruction of that company), after subsection (5)
insert—
“(5A)
If immediately before the acquisition the target company or the
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acquiring company holds any of its own shares, the shares are to be
treated for the purposes of subsections (4) and (5) as having been
cancelled before the acquisition (and, accordingly, the company is to be
treated as if it were not a shareholder of itself).”
(2)
In section 77 of that Act (relief on acquisition of target company’s share
20
capital), after subsection (3) insert—
“(3A)
If immediately before the acquisition the target company or the
acquiring company holds any of its own shares, the shares are to be
treated for the purposes of subsection (3) as having been cancelled
before the acquisition (and, accordingly, the company is to be treated as
25
if it were not a shareholder of itself).”
(3)
In Part 2 of Schedule 7 to FA 2003 (SDLT: reconstruction and acquisition
reliefs), in paragraph 7 (reconstruction relief) after sub-paragraph (5) insert—
   “(5A)
If immediately before the acquisition the target company or the
acquiring company holds any of its own shares, the shares are to be
30
treated for the purposes of sub-paragraphs (2) and (4) as having been
cancelled before the acquisition (and, accordingly, the company is to
be treated as if it were not a shareholder of itself).”
(4)
The amendments made by subsections (1) and (2) have effect in relation to any
instrument executed on or after the day on which this Act is passed.
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(5)
The amendment made by subsection (3) has effect in relation to any land
transaction of which the effective date is on or after that day.

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Other reliefs etc
74
SDLT: alternative finance arrangements
(1)
In FA 2003, after section 73A insert—
“73B
Exempt interests
(1)
An interest held by a financial institution as a result of the first
5
transaction within the meaning of section 71A(1)(a), 72(1)(a) or
72A(1)(a) is an exempt interest for the purposes of stamp duty land tax.
(2)
That interest ceases to be an exempt interest if—
(a)
the lease or agreement mentioned in section 71A(1)(c), 72(1)(b)
or 72A(1)(b) ceases to have effect, or
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(b)
the right under section 71A(1)(d), 72(1)(c) or 72A(1)(c) ceases to
have effect or becomes subject to a restriction.
(3)
Subsection (1) does not apply if the first transaction is exempt from
charge by virtue of Schedule 7.
(4)
Subsection (1) does not make an interest exempt in respect of—
15
(a)
the first transaction itself, or
(b)
a further transaction or third transaction within the meaning of
section 71A(4), 72(4) or 72A(4).”
(2)
In section 48 of that Act (stamp duty land tax: exempt interests), after
subsection (3) insert—
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“(3A)
Section 73B makes additional provision about exempt interests in
relation to alternative finance arrangements.”
(3)
For the text of sections 71A(8), 72(7), 72A(8) and 73(5)(a) of that Act (alternative
finance arrangements: meaning of “financial institution”), substitute “In this
section “financial institution” has the meaning given by section 46 of the
25
Finance Act 2005 (alternative finance arrangements).”
(4)
The amendments made by this section—
(a)
have effect in relation to anything that would, but for the exemption
provided by new section 73B inserted by subsection (1) above, be a land
transaction with an effective date on or after 22nd March 2007, and
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(b)
apply, in accordance with paragraph (a), to interests irrespective of the
date of their creation.
75
SDLT: exchanges
(1)
In section 47(1) of FA 2003 (exchanges), insert at the end “(and they are not
linked transactions within the meaning of section 108)”.
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(2)
In section 108 of that Act (linked transactions), insert at the end—
“(4)
This section is subject to section 47(1).”
(3)
The amendments made by this section have effect in relation to a set of land
transactions if the effective date of any of them is on or after the day on which
this Act is passed.
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Part 5 — SDLT, stamp duty and SDRT
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76
SDLT: shared ownership trusts
(1)
In Schedule 9 to FA 2003 (right to buy and shared ownership leases), insert at
the end—
“Shared ownership trust: introduction
7     (1)
In this Schedule “shared ownership trust” means a trust of land,
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within the meaning of section 1 of the Trusts of Land and
Appointment of Trustees Act 1996, which satisfies the following
conditions.
      (2)
Condition 1 is that the trust property is—
(a)
a dwelling, and
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(b)
in England or Wales.
      (3)
Condition 2 is that one of the beneficiaries (“the social landlord”) is a
qualifying body (within the meaning of paragraph 5(2)).
      (4)
Condition 3 is that the terms of the trust—
(a)
provide for one or more of the individual beneficiaries (“the
15
purchaser”) to have exclusive use of the trust property as the
only or main residence of the purchaser,
(b)
require the purchaser to make an initial payment to the social
landlord (“the initial capital”),
(c)
require the purchaser to make additional payments to the
20
social landlord by way of compensation under section
13(6)(a) of the Trusts of Land and Appointment of Trustees
Act 1996, (“rent-equivalent payments”),
(d)
enable the purchaser to make other additional payments to
the social landlord (“equity-acquisition payments”),
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(e)
determine the initial beneficial interests of the social landlord
and of the purchaser by reference to the initial capital,
(f)
specify a sum, equating or relating to the market value of the
dwelling, by reference to which the initial capital was
calculated, and
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(g)
provide for the purchaser’s beneficial interest in the trust
property to increase, and the social landlord’s to diminish (or
to be extinguished), as equity-acquisition payments are
made.
      (5)
Section 118 (meaning of “market value”) does not apply to this
35
paragraph.
      (6)
In Condition 1 “dwelling” includes—
(a)
a building which is being constructed or adapted for use as a
dwelling,
(b)
land which is to be used for the purpose of the construction
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of a dwelling, and
(c)
land which is, or is to become, the garden or grounds of a
dwelling.

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Shared ownership trust: “purchaser”
8
For the purposes of the application of stamp duty land tax in relation
to a shared ownership trust, the person (or persons) identified as the
purchaser in accordance with paragraph 7, and not the social
landlord or any other beneficiary, is (or are) to be treated as the
5
purchaser of the trust property.
Shared ownership trust: election for market value treatment
9     (1)
This paragraph applies where—
(a)
a shared ownership trust is declared, and
(b)
the purchaser elects for tax to be charged in accordance with
10
this paragraph.
      (2)
An election must be included in—
(a)
the land transaction return for the declaration of the shared
ownership trust, or
(b)
an amendment of that return.
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      (3)
An election may not be revoked.
      (4)
Where this paragraph applies—
(a)
the chargeable consideration for the declaration of the shared
ownership trust shall be taken to be the amount stated in
accordance with paragraph 7(4)(f), and
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(b)
no account shall be taken for the purposes of stamp duty land
tax of rent-equivalent payments.
      (5)
The transfer to the purchaser of an interest in the trust property upon
the termination of the trust is exempt from charge if—
(a)
an election was made under this paragraph, and
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(b)
any tax chargeable in respect of the declaration of the shared
ownership trust has been paid.
Shared ownership trust: treatment of staircasing transaction
10    (1)
An equity-acquisition additional payment under a shared
ownership trust, and the consequent increase in the purchaser’s
30
beneficial interest, shall be exempt from charge if—
(a)
an election was made under paragraph 9, and
(b)
any tax chargeable in respect of the declaration of trust has
been paid.
      (2)
An equity-acquisition additional payment under a shared
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ownership trust, and the consequent increase in the purchaser’s
beneficial interest, shall also be exempt from charge if following the
increase the purchaser’s beneficial interest does not exceed 80% of
the total beneficial interest in the trust property.
Shared ownership trust: treatment of additional payments where no election made
40
11
Where no election has been made under paragraph 9 in respect of a
shared ownership trust—

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(a)
the initial capital shall be treated for the purposes of stamp
duty land tax as chargeable consideration other than rent,
and
(b)
any rent-equivalent additional payment by the purchaser
shall be treated for the purposes of stamp duty land tax as a
5
payment of rent.”
(2)
The amendment made by subsection (1) has effect in relation to land
transactions with an effective date on or after the day on which this Act is
passed.
77
SDLT: shared ownership lease
10
In paragraph 2 of Schedule 9 to FA 2003 (stamp duty land tax: shared
ownership lease), after sub-paragraph (4) insert—
   “(4A)
Where this paragraph applies no account shall be taken for the
purposes of stamp duty land tax of the rent mentioned in sub-
paragraph (2)(d).”
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78
Certain transfers of school land
(1)
In Chapter 7 of Part 2 of the School Standards and Framework Act 1998 (c. 31)
(“the 1998 Act”) (new framework for maintained schools), omit sections 79 and
79A (no stamp duty or SDLT payable in respect of certain transfers).
(2)
The repeal of—
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(a)
section 79A of the 1998 Act, and
(b)
section 79 of that Act as it applies for the purposes of section 79A,

has effect in relation to any land transaction of which the effective date is on or
after the day on which this Act is passed.
(3)
Subject to that, the repeal of section 79 of the 1998 Act has effect in relation to
25
any instrument executed on or after that day.
SDLT: administration
79
Payment of tax
(1)
FA 2003 is amended as follows.
(2)
In section 76(3) (payment to accompany land transaction return), omit
30
paragraph (b).
(3)
In section 80(2) (adjustment for change of circumstance: payment to
accompany return), for paragraph (d) substitute—
“(d)
the tax or additional tax payable must be paid not later than the
filing date for the return.”
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(4)
In section 81 (withdrawal of relief: further return)—
(a)
in subsection (2), omit paragraph (b), and
(b)
after that subsection insert—
“(2A)
Tax payable must be paid not later than the filing date for the
return.”
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(5)
In section 81A(1) (later linked transaction: return), for paragraph (d)
substitute—
“(d)
the tax or additional tax payable must be paid not later than the
filing date for the return.”
(6)
In section 86 (payment of tax)—
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(a)
in subsection (1), for “at the same time that a land transaction return is
made in respect of the transaction.” substitute “not later than the filing
date for the land transaction return relating to the transaction.”, and
(b)
in subsection (2), for “at the same time that a return is made in respect
of the withdrawal” substitute “not later than the filing date for the
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return relating to the withdrawal”.
(7)
In paragraph 2 of Schedule 10 (payment to accompany land transaction
return), omit sub-paragraph (2)(b).
(8)
For each of paragraphs 3(3)(d), 4(3)(d) and 8(3)(d) of Schedule 17A (leases)
substitute—
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“(d)
the tax or additional tax payable must be paid not later than
the filing date for the return.”
(9)
The amendments made by this section have effect as follows—
(a)
the amendment made by subsection (2) has effect in relation to land
transactions with an effective date on or after the day on which this Act
20
is passed,
(b)
the amendment made by subsection (3) has effect in relation to returns
where the event as a result of which the return is required occurs on or
after the day on which this Act is passed,
(c)
the amendment made by subsection (4) has effect in relation to returns
25
where the disqualifying event occurs on or after the day on which this
Act is passed,
(d)
the amendment made by subsection (5) has effect in relation to returns
where the effective date of the later transaction is on or after the day on
which this Act is passed,
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(e)
the amendment made by subsection (6) has effect in relation to land
transactions with an effective date on or after the day on which this Act
is passed,
(f)
the amendment made by subsection (7) has effect in relation to land
transactions with an effective date on or after the day on which this Act
35
is passed, and
(g)
the amendment made by subsection (8) has effect in respect of
requirements to deliver a return or further return which arise on or
after the day on which this Act is passed.
80
Self-certificate declarations
40
(1)
Schedule 11 to FA 2003 (self-certificates) is amended as follows.
(2)
After paragraph 2 insert—
“Declaration by Agent
2A    (1)
The requirement in paragraph 2(1)(c) shall be deemed to be met
where—
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Part 6 — Investigation, administration etc
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(a)
the purchaser (or each of them) authorises an agent to
complete a self-certificate,
(b)
the purchaser (or each of them) makes a declaration that,
with the exception of the effective date, the information
provided in the self-certificate is to the best of the purchaser’s
5
knowledge correct and complete, and
(c)
the self-certificate includes a declaration by the agent that the
effective date provided in the self-certificate is to the best of
the agent’s knowledge correct.
      (2)
Sub-paragraph (1) applies only where the self-certificate is in a form
10
specified by Her Majesty’s Revenue and Customs for the purposes of
that sub-paragraph.
      (3)
Nothing in this paragraph affects the liability of the purchaser (or
each of them) under this Part of this Act.
Declaration by the relevant Official Solicitor
15
2B    (1)
The requirement in paragraph 2(1)(c) shall be deemed to be met
where—
(a)
the purchaser (or any of them) is a person under a disability,
(b)
the Official Solicitor is acting for the purchaser (or any of
them), and
20
(c)
the self-certificate includes a declaration by the Official
Solicitor that the self-certificate is correct and complete to the
best of the Official Solicitor’s knowledge.
      (2)
Sub-paragraph (1) applies only where the self-certificate is in a form
specified by Her Majesty’s Revenue and Customs for the purposes of
25
that sub-paragraph.
      (3)
Nothing in this paragraph affects the liability of the purchaser (or
each of them) under this Part of this Act.
      (4)
In this paragraph “the Official Solicitor” means the Official Solicitor
to the Supreme Court of England and Wales or the Official Solicitor
30
to the Supreme Court of Northern Ireland.”
(3)
In paragraph 3(1), for “person” substitute “purchaser”.
(4)
The amendments made by this section have effect in relation to transactions
with an effective date on or after the day on which this Act is passed.
Part 6
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Investigation, administration etc
Investigation etc
81
Criminal investigations: powers of Revenue and Customs
(1)
Section 114 of the Police and Criminal Evidence Act 1984 (c. 60) (application of
Act to customs and excise) is amended as follows.
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(2)
In paragraph (a) of subsection (2)—