Finance (No. 3) Bill

Session 2010 - 11
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Finance (No. 3) Bill

Finance (No. 3) Bill
Schedule 21 — Prevention of SDLT avoidance
346

Schedule 21
Section 82

Prevention of SDLT avoidance
Introduction
1
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
Alternative property finance
5
2
In section 45 (contract and conveyance: effect of transfer of rights), in
subsection (3) for the words from “subsection (3)” to the end substitute “any
of sections 71A to 73 (which relate to alternative property finance).”
3     (1)
Omit sections 71A(8), 72(7), 72A(8) and 73(5)(a) (which contain definitions of
“financial institution” for the purposes of provisions relating to alternative
10
property finance).
      (2)
After section 73B insert—
“73BA
Meaning of “financial institution”
(1)
In sections 71A to 73B “financial institution” has the meaning given
by section 564B of the Income Tax Act 2007.
15
(2)
For this purpose section 564B(1) applies as if paragraph (d) were
omitted.”
Exchanges
4     (1)
Paragraph 5 of Schedule 4 (chargeable consideration: exchanges) is
amended as follows.
20
      (2)
In sub-paragraph (3)—
(a)
for paragraph (a)(i) and (ii) substitute—
“(i)
the amount determined under sub-
paragraph (3A) in respect of the acquisition,
or
25
(ii)
if greater, the amount which would be the
chargeable consideration for the acquisition
ignoring paragraph 5;”, and
(b)
for paragraph (b)(i) and (ii) substitute—
“(i)
the amount determined under sub-
30
paragraph (3A) in respect of that
acquisition, or
(ii)
if greater, the amount which would be the
chargeable consideration for that
acquisition ignoring paragraph 5;”.
35
      (3)
After that sub-paragraph insert—
   “(3A)
The amount mentioned in sub-paragraph (3)(a)(i) and (b)(i) is—
(a)
the market value of the subject-matter of the acquisition,
and
(b)
if the acquisition is the grant of a lease at a rent, that rent.”
40

Finance (No. 3) Bill
Schedule 21 — Prevention of SDLT avoidance
347

Commencement
5     (1)
Subject to what follows, the amendments made by paragraphs 2 and 4 have
effect in relation to any transaction the effective date of which is on or after
24 March 2011.
      (2)
The amendments do not have effect in relation to any transaction (other than
5
a notional transaction under section 75A of FA 2003)—
(a)
which is effected in pursuance of a contract entered into and
substantially performed before 24 March 2011, or
(b)
which is effected in pursuance of a contract entered into before 24
March 2011 and which is not excluded by sub-paragraph (4).
10
      (3)
The amendments do not have effect in relation to any notional transaction
under section 75A of FA 2003 if any scheme transaction—
(a)
is completed before 24 March 2011,
(b)
is effected in pursuance of a contract entered into and substantially
performed before 24 March 2011, or
15
(c)
is effected in pursuance of a contract entered into before 24 March
2011 and is not excluded by sub-paragraph (4).
      (4)
A transaction effected in pursuance of a contract entered into before 24
March 2011 is excluded by this sub-paragraph if—
(a)
there is any variation of the contract, or assignment of rights under
20
the contract, on or after 24 March 2011,
(b)
the transaction is effected in consequence of the exercise on or after
24 March 2011 of any option, right of pre-emption or similar right, or
(c)
on or after 24 March 2011, there is an assignment, sub-sale or other
transaction relating to the whole or part of the subject-matter of the
25
contract as a result of which a person other than the purchaser under
the contract becomes entitled to call for a conveyance.
      (5)
Terms used in this paragraph have the same meaning as in Part 4 of FA 2003.
6     (1)
The amendments made by paragraph 3 are treated as having come into force
on 24 March 2011.
30
      (2)
But those amendments—
(a)
do not have effect for the purposes of any of sections 71A to 73B of
FA 2003 (other than those provisions mentioned in paragraph (b)
below) if the arrangements referred to in section 71A(1), 72(1), 72A(1)
or 73(1) (as the case may be) were entered into before 24 March 2011,
35
and
(b)
do not have effect for the purposes of section 71A(2)(b), 72(2)(b),
72A(2)(b) or 73(2)(b) of that Act if the arrangements referred to there
were entered into before 24 March 2011.

Finance (No. 3) Bill
Schedule 22 — Transfers involving multiple dwellings
348

Schedule 22
Section 83

Transfers involving multiple dwellings
New relief
1
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
2
After section 58C insert—
5
“58D
Transfers involving multiple dwellings
(1)
Schedule 6B provides for relief in the case of transfers involving
multiple dwellings.
(2)
Any relief under that Schedule must be claimed in a land transaction
return or an amendment of such a return.”
10
3
After Schedule 6A insert—
“Schedule 6B
Section 58D

Transfers involving multiple dwellings
Introduction
1
This Schedule is arranged as follows—
15
(a)
paragraph 2 identifies the transactions to which this
Schedule applies,
(b)
paragraph 3 defines key terms,
(c)
paragraphs 4 and 5 describe the relief available if a claim is
made,
20
(d)
paragraph 6 provides for adjustments if circumstances
change after a claim is made, and
(e)
paragraph 7 contains rules for determining what counts as
a dwelling.
Transactions to which this Schedule applies
25
2     (1)
This Schedule applies to a chargeable transaction that is—
(a)
within sub-paragraph (2) or sub-paragraph (3), and
(b)
not excluded by sub-paragraph (4).
      (2)
A transaction is within this sub-paragraph if its main subject-
matter consists of—
30
(a)
an interest in at least two dwellings, or
(b)
an interest in at least two dwellings and other property.
      (3)
A transaction is within this sub-paragraph if—
(a)
its main subject-matter consists of—
(i)
an interest in a single dwelling, or
35
(ii)
an interest in a single dwelling and other property,
(b)
it is one of a number of linked transactions, and
(c)
the main subject-matter of at least one of the other linked
transactions consists of—

Finance (No. 3) Bill
Schedule 22 — Transfers involving multiple dwellings
349

(i)
an interest in some other dwelling or dwellings, or
(ii)
an interest in some other dwelling or dwellings and
other property.
      (4)
A transaction is excluded by this sub-paragraph if—
(a)
section 74 or 75 applies to it, or
5
(b)
relief under Schedule 7 or Schedule 8 is available for it or
would be available for it on the making of a claim or has
been withdrawn from it.
      (5)
A reference in this Schedule to an interest in a dwelling is to any
chargeable interest in or over a dwelling.
10
      (6)
But, in the case of a dwelling subject to a lease granted for an initial
term of more than 21 years, any interest that is a superior interest
in relation to the lease is to be ignored in determining whether a
transaction is a relevant transaction.
Key terms
15
3     (1)
A chargeable transaction to which this Schedule applies is referred
to in this Schedule as a “relevant transaction”.
      (2)
A relevant transaction is a “single dwelling transaction” if its main
subject-matter consists of—
(a)
an interest in a single dwelling, or
20
(b)
an interest in a single dwelling and other property.
      (3)
In relation to such a transaction, the single dwelling is referred to
as “the dwelling”.
      (4)
A relevant transaction is a “multiple dwelling transaction” if its
main subject-matter consists of—
25
(a)
an interest in at least two dwellings, or
(b)
an interest in at least two dwellings and other property.
      (5)
In relation to such a transaction, those dwellings are referred to as
“the dwellings”.
The relief
30
4     (1)
If relief under this Schedule is claimed for a relevant transaction,
the amount of tax chargeable in respect of the transaction is—
(a)
a percentage of the consideration attributable to dwellings,
plus
(b)
a percentage of the remaining consideration (if any).
35
      (2)
“The consideration attributable to dwellings” is—
(a)
for a single dwelling transaction, so much of the
chargeable consideration for the transaction as is
attributable to the dwelling,
(b)
for a multiple dwelling transaction, so much of the
40
chargeable consideration for the transaction as is
attributable to the dwellings in total.

Finance (No. 3) Bill
Schedule 22 — Transfers involving multiple dwellings
350

      (3)
“The remaining consideration” is the chargeable consideration for
the transaction less the consideration attributable to dwellings.
      (4)
The percentages are determined in accordance with paragraph 5.
      (5)
If the whole or part of the chargeable consideration for a relevant
transaction is rent, sub-paragraph (1) has effect subject to section
5
56 and Schedule 5.
      (6)
“Attributable” means attributable on a just and reasonable basis.
The percentages
5     (1)
For the purposes of paragraph 4(1)(a), the percentage is the
percentage that would be applied under section 55 if—
10
(a)
the relevant land consisted entirely of residential property,
and
(b)
the relevant consideration were the fraction produced by
dividing total dwellings consideration by total dwellings.
      (2)
But if that percentage turns out to be 0%, the percentage for the
15
purposes of paragraph 4(1)(a) is 1%.
      (3)
For a transaction that is not one of a number of linked transactions,
“total dwellings consideration” is the consideration attributable to
dwellings for that transaction (see paragraph 4(2)).
      (4)
For one of a number of linked transactions, “total dwellings
20
consideration” is—
(a)
the total of the consideration attributable to dwellings for
that transaction and all the other linked transactions that
are relevant transactions, plus
(b)
so much of the chargeable consideration for any of the
25
linked transactions (whether or not relevant transactions)
as is not included in the calculation under paragraph (a)
but is attributable to the same dwellings by reference to
which that calculation is made.
      (5)
“Total dwellings” is the total number of dwellings by reference to
30
which total dwellings consideration is calculated.
      (6)
In the application of sub-paragraph (1), no account is to be taken
of—
(a)
section 116(7), or
(b)
paragraph 9A(4) of Schedule 5.
35
      (7)
For the purposes of paragraph 4(1)(b), the percentage is the
percentage that (but for this Schedule) would be applied under
section 55 to the chargeable consideration for the transaction.
Adjustment for change of circumstances
6     (1)
This paragraph applies if—
40
(a)
relief under this Schedule is claimed for a relevant
transaction,
(b)
an event occurs in the relevant period, and

Finance (No. 3) Bill
Schedule 22 — Transfers involving multiple dwellings
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(c)
had the event occurred immediately before the effective
date of the transaction—
(i)
the transaction would not have been a relevant
transaction or the percentage applied by virtue of
paragraph 4(1)(a) would have been higher, and
5
(ii)
more tax would have been payable in respect of the
transaction as a result.
      (2)
If this paragraph applies, tax is chargeable on the transaction as if
the event had occurred immediately before the effective date of
the transaction.
10
      (3)
In that case—
(a)
the purchaser must make a return to Her Majesty’s
Revenue and Customs before the end of the period of 30
days beginning with the date of the event,
(b)
the return must contain a self-assessment of the tax
15
chargeable in respect of the transaction on the basis of the
information contained in the return,
(c)
the tax so chargeable is to be calculated by reference to the
rates in force at the effective date of the transaction, and
(d)
the additional tax payable must be paid not later than the
20
filing date for the return.
      (4)
The provisions of section 78A and Schedule 10 apply to a return
under this paragraph as they apply to a return under section 76,
but with references in Schedule 10 to the effective date of the
transaction being read as references to the date of the event.
25
      (5)
“The relevant period” means the shorter of—
(a)
the period of 3 years beginning with the effective date of
the transaction, and
(b)
the period beginning with the effective date of the
transaction and ending with the date on which the
30
purchaser disposes of the dwelling, or the dwellings, to a
person who is not connected with the purchaser.
      (6)
In relation to a transaction effected on completion of a contract
that was substantially performed before completion, sub-
paragraph (5) applies as if references to the effective date of the
35
transaction were to the date on which the contract was
substantially performed.
      (7)
In this paragraph—
“contract” includes any agreement (including, in the case of
Scotland, missives of let not constituting a lease);
40
“completion” has the same meaning as in section 44;
“event” includes any change of circumstance or change of
plan;
“substantially performed” has the same meaning as in section
44.
45
      (8)
Section 1122 of the Corporation Tax Act 2010 (connected persons)
has effect for the purposes of this paragraph.

Finance (No. 3) Bill
Schedule 22 — Transfers involving multiple dwellings
352

What counts as a dwelling
7     (1)
This paragraph sets out rules for determining what counts as a
dwelling for the purposes of this Schedule.
      (2)
A building or part of a building counts as a dwelling if—
(a)
it is used or suitable for use as a single dwelling, or
5
(b)
it is in the process of being constructed or adapted for such
use.
      (3)
Land that is, or is to be, occupied or enjoyed with a dwelling as a
garden or grounds (including any building or structure on such
land) is taken to be part of that dwelling.
10
      (4)
Land that subsists, or is to subsist, for the benefit of a dwelling is
taken to be part of that dwelling.
      (5)
The main subject-matter of a transaction is also taken to consist of
or include an interest in a dwelling if—
(a)
substantial performance of a contract constitutes the
15
effective date of that transaction by virtue of a relevant
deeming provision,
(b)
the main subject-matter of the transaction consists of or
includes an interest in a building, or a part of a building,
that is to be constructed or adapted under the contract for
20
use as a single dwelling, and
(c)
construction or adaptation of the building, or the part of a
building, has not begun by the time the contract is
substantially performed.
      (6)
In sub-paragraph (5)—
25
“contract” includes any agreement (including, in the case of
Scotland, missives of let not constituting a lease);
“relevant deeming provision” means any of sections 44 to
45A or paragraph 12A or 19(3) of Schedule 17A;
“substantially performed” has the same meaning as in section
30
44.
      (7)
Subsections (2) to (5) of section 116 apply for the purposes of this
paragraph as they apply for the purposes of subsection (1)(a) of
that section.”
Other amendments of Part 4 FA 2003
35
4
In section 57 of FA 2003 (disadvantaged areas relief), insert at the end—
“(3)
Relief is not available under that Schedule in the case of any
transaction for which relief under Schedule 6B is claimed.”
5
In section 87(3) of that Act (interest on unpaid tax), after paragraph (a)
insert—
40
“(aza)
in the case of an amount payable by virtue of paragraph 6 of
Schedule 6B (adjustment for change of circumstances), the
date of the event;”.
6
In paragraph 9 of Schedule 5 to that Act (amount of tax chargeable: rent)—