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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.

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(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

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(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

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(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

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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.

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      (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

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(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

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      (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

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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)—

 
 

 
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Revised 31 March 2011