(1) Schedule 42 to this Act (which amends Part 2 of Schedule 25 to the Taxes Act 1988 (exempt activities)) shall have effect.
(2) The amendments made by that Schedule have effect in relation to accounting periods of a controlled foreign company beginning on or after 27th November 2002.
(3) In this section “accounting period” and “controlled foreign company” have the same meaning as in Chapter 4 of Part 17 of the Taxes Act 1988.
(4) This section shall be taken to have come into force on 27th November 2002.
201 Application of CFC provisions to Hong Kong and Macao companies
(1) In Part 2 (exempt activities) of Schedule 25 to the Taxes Act 1988 (cases where section 747(3) does not apply), in paragraph 5 insert after sub-paragraph (2)—
(3) In the case of a controlled foreign company—
(a) which is, by virtue of section 749(5), presumed to be resident in a territory in which it is subject to a lower level of taxation,
(b) the business affairs of which are, throughout the accounting period in question, effectively managed in a special administrative region, and
(c) which is liable to tax for that period in that region,
references in the following provisions of this Part of this Schedule to the territory in which that company is resident shall be construed as references to that region.
(4) In sub-paragraph (3) above “special administrative region” means the Hong Kong or the Macao Special Administrative Region of the People’s Republic of China.
(5) Where sub-paragraph (3) above applies, it applies in place of sub-paragraph (2).
.
(2) This section shall be deemed to have had effect—
(a) as from 1st July 1997, so far as relating to the Hong Kong Special Administrative Region;
(b) as from 20th December 1999, so far as relating to the Macao Special Administrative Region.
203 Authorised unit trusts: interest distributions paid gross
(1) Chapter 3 of Part 12 of the Taxes Act 1988 (unit trust schemes) is amended as follows.
(2) In section 468L(4) (obligation to deduct tax from interest distributions to be subject to provision made by sections 468M and 468N), for “sections 468M and 468N” substitute “ section 468M ”.
(3) For sections 468M and 468N substitute—
Cases where no obligation to deduct tax
468M (1) Where an interest distribution is made for a distribution period to a unit holder, any obligation to deduct under section 349(2) does not apply to the interest distribution if—
(a) the unit holder is a company or the trustees of a unit trust scheme, or
(b) either the residence condition or the reputable intermediary condition is on the distribution date fulfilled with respect to the unit holder.
(2) Section 468O makes provision about the circumstances in which the residence condition or the reputable intermediary condition is fulfilled with respect to a unit holder.
.
(4) Section 468O (residence condition) is amended as follows.
(5) In subsection (1), for “sections 468M and 468N” substitute “ section 468M ”.
(6) After that subsection insert—
(1A) For the purposes of section 468M, the reputable intermediary condition is fulfilled with respect to a unit holder if—
(a) the interest distribution is paid on behalf of the unit holder to a company,
(b) the company either is subject to the EC Money Laundering Directive, or to equivalent non-EC provisions, or is an associated company resident in a regulating country or territory of a company which is so subject, and
(c) the trustees of the authorised unit trust have reasonable grounds for believing that the unit holder is not ordinarily resident in the United Kingdom.
(1B) For the purposes of subsection (1A)(b) above—
(a) a company is subject to the EC Money Laundering Directive if it is a credit institution or financial institution as defined by Article 1 of Directive 91/308/EEC, as amended by Directive 2001/97/EC,
(b) a company is subject to equivalent non-EC provisions if it is required by the law of any country or territory which is not a member State to comply with requirements similar to those which, under Article 3 of that Directive (as so amended), member States must ensure are complied with by credit institutions and financial institutions,
(c) a company is to be treated as another’s associated company if it would be so treated for the purposes of Part 11 (see section 416), and
(d) a country or territory is a regulating country or territory if it either is a member State or imposes requirements similar to those which, under Article 3 of that Directive (as so amended), member States must ensure are complied with by credit institutions and financial institutions.
(1C) If Directive 91/308/EEC ceases to have effect, or is further amended, the Treasury may by order make consequential amendments in subsections (1A) and (1B) above.
.
(7) In the sidenote, insert at the end “ and reputable intermediary condition ”.
(8) In section 468P(1) (residence declarations)—
(a) for “468O” substitute “ 468O(1) ”, and
(b) for “subsections (2) to (4)” substitute “ subsection (2) or (3) ”.
(9) After section 468P insert—
Section 468O(1A): consequences of reasonable but incorrect belief
468PA Where—
(a) an interest distribution is made to a unit holder by the trustees of an authorised unit trust,
(b) the trustees, in reliance on the reputable intermediary condition being fulfilled with respect to the unit holder, do not comply with the obligation under section 349(2) to make a deduction from the interest distribution,
(c) that obligation would apply but for that condition being so fulfilled, and
(d) (contrary to the belief of the trustees) the unit holder is in fact ordinarily resident in the United Kingdom,
section 350 and Schedule 16 have effect as if that obligation applied.
Regulations supplementing sections 468M to 468PA
468PB (1) The Board may by regulations make provision for giving effect to sections 468M to 468PA.
(2) The regulations may, in particular, include provision modifying the application of those sections in relation to interest distributions made to or received under a trust.
(3) The regulations may, in particular, include provision for the giving by officers of the Board of notices requiring trustees of authorised unit trusts to supply information and make available books, documents and other records for inspection on behalf of the Board.
(4) The regulations may—
(a) make provision in relation to times before they are made,
(b) make different provision for different cases, and
(c) make such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
.
(10) Section 98 of the Taxes Management Act 1970 (c. 9) (penalties: provisions requiring information etc in response to notices) is amended as follows.
(11) In subsection (4A)(b), for “or (4D)” substitute “ , (4D) or (4E) ”.
(12) After subsection (4D) insert—
(4E) A payment is within this subsection if—
(a) it is an interest distribution made to a unit holder by the trustees of an authorised unit trust,
(b) the trustees, in purported reliance on the reputable intermediary condition being fulfilled with respect to the unit holder, do not comply with the obligation under section 349(2) of the principal Act to make a deduction from the interest distribution,
(c) that obligation would apply if that condition were not so fulfilled, and
(d) the trustees did not believe that the unit holder was not ordinarily resident in the United Kingdom or could not reasonably have so believed (so that that condition was not so fulfilled).
Expressions used in this subsection have the same meaning as in Chapter 3 of Part 12 of the principal Act.
.
(13) In the first column of the Table, after the entry relating to regulations under section 431E(1) or 441A(3) of the principal Act, insert—
“ section 468P(6); regulations under section 468PB(3); ”.
(14) This section has effect in relation to interest distributions made on or after 16th October 2002.
(1) The Commissioners for Her Majesty's Revenue and Customs may make regulations requiring a person to use electronic means in making specified payments under legislation relating to a tax (or duty) for which the Commissioners are responsible.
(2) The regulations may provide for exceptions.
(3) Regulations under this section may make provision—
(a) as to conditions that must be complied with in connection with the use of electronic means for the making of any payment;
(b) for treating a payment as not having been made unless conditions imposed by any of the regulations are satisfied;
(c) for determining the time when payment is to be taken to have been made.
(4) Regulations under this section may also make provision (which may include provision for the application of conclusive or other presumptions) as to the manner of proving for any purpose—
(a) whether any use of electronic means for making a payment is to be taken as having resulted in the payment being made;
(b) the time of the making of any payment for the making of which electronic means have been used;
(c) any other matter for which provision may be made by regulations under this section.
(5) Regulations under this section may—
(a) allow any authorisation or requirement for which the regulations may provide to be given or imposed by means of a specific or general direction given by the Commissioners;
(b) provide that the conditions of any such authorisation or requirement are to be taken to be satisfied only where Her Majesty's Revenue and Customs are satisfied as to specified matters.
(6) Regulations under this section may contain provision—
(a) requiring Her Majesty's Revenue and Customs to notify persons appearing to them to be, or to have become, a person required to use electronic means for the making of any payments in accordance with the regulations;
(b) enabling a person so notified to have the question whether he is such a person determined in the same way as an appeal.
(7) Regulations under this section may confer power on the Commissioners to give specific or general directions—
(a) suspending, for any period during which the use of electronic means for the making of payments is impossible or impractical, any requirements imposed by the regulations relating to the use of such means;
(b) substituting alternative requirements for the suspended ones;
(c) making any provision that is necessary in consequence of the imposition of the substituted requirements.
(8) The power to make provision by regulations under this section includes power—
(a) to provide for a contravention by a large employer of, or any failure by a large employer to comply with, the regulations (a “default”) to attract a surcharge of a specified amount;
(b) to provide that specified enactments relating to penalties imposed for the purposes of any matter relating to a tax (or duty) for which the Commissioners are responsible (including enactments relating to assessments, review and appeal) apply, with or without modifications, in relation to surcharges under the regulations.
(9) The regulations may specify the surcharge for each default as—
(a) a specified percentage, depending on the circumstances but not exceeding 10%, of the amount of the payment to which the default relates, or
(b) a specified percentage, depending on the circumstances but not exceeding 0.83%, of the total amount of tax due for the accounting period, year of assessment or other specified period of twelve months during which the default occurred;
but, in either case, they may specify £30 if it is more.
(10) Regulations under this section may—
(a) make different provision for different cases;
(b) make such incidental, supplemental, consequential and transitional provision in connection with any provision contained in any of the regulations as the Commissioners think fit.
(11) Regulations under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
(12) In this section—
“Her Majesty's Revenue and Customs” includes a person acting under the authority of the Commissioners in relation to payment by electronic means;
“large employer” means a person paying PAYE income to 250 or more recipients (and regulations under this section may make provision as to the date or period by reference to which this is to be determined and the circumstances in which a person is to be treated as paying PAYE income to a recipient);
“legislation” means any enactment, EU or subordinate legislation;
“specified” means specified by or under regulations under this section;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30).
(13) Regulations under section 95(1) of the Finance Act 2007 (payment by cheque) may, in particular, provide for a payment which is made by cheque in contravention of regulations under this section to be treated as made when the cheque clears, as defined in the regulations under that section.
205 Use of electronic means of payment under other provisions
(1) Any power to make subordinate legislation for or in connection with the making of payments conferred in relation to a taxation (or duty) matter on—
(a) the Commissioners for Her Majesty's Revenue and Customs, or
(b) the Treasury,
includes power to make any such provision in relation to the making of those payments as could be made in exercise of the power conferred by section 204.
(2) Provision as to means of payment made in exercise of the powers conferred by section 204 or subsection (1) above has effect notwithstanding so much of any enactment or subordinate legislation as would otherwise allow payment to be made by any other means.
(3) Expressions used in this section and section 204 have the same meaning in this section as in that section.
(4) Nothing in this section shall be read as restricting the generality of the power conferred by section 204.
206 Admissibility of evidence not affected by offer of settlement etc
(1) In section 105(1) of the Taxes Management Act 1970 (c. 9) (evidence in cases of fraudulent conduct), for paragraphs (a) and (b) and the word “that” preceding them substitute—
(a) that where serious tax fraud has been committed the Board may accept a money settlement and that the Board will accept such a settlement, and will not pursue a criminal prosecution, if he makes a full confession of all tax irregularities, or
(b) that the extent to which he is helpful and volunteers information is a factor that will be taken into account in determining the amount of any penalty,
.
(2) For the heading to that section substitute “ Admissibility of evidence not affected by offer of settlement etc ”.
(3) In paragraph 3(1) of Schedule 18 to the Finance Act 1999 (c. 16) (which makes corresponding provision in relation to stamp duty), for paragraphs (a) and (b) substitute—
(a) that where serious stamp duty fraud has been committed the Board may accept a money settlement and that the Board will accept such a settlement, and will not pursue a criminal prosecution, if he makes a full confession of all stamp duty irregularities, or
(b) that the extent to which he is helpful and volunteers information is a factor that will be taken into account in determining the amount of any penalty,
.
(4) For the heading before that paragraph substitute “ Admissibility of evidence not affected by offer of settlement etc ”.
(5) The above amendments have effect in relation to statements made, or documents produced, after the passing of this Act.
(1) In Part 4 of the Taxes Management Act 1970 (assessment and claims), after section 43B insert—
Consequential claims etc
43C (1) Where—
(a) a return is amended under section 28A(2)(b), 28B(2)(b) or 28B(4), and
(b) the amendment is made for the purpose of making good to the Crown any loss of tax attributable to fraudulent or negligent conduct on the part of the taxpayer or a person acting on his behalf,
sections 36(3) and 43(2) apply in relation to the amendment as they apply in relation to any assessment under section 29.
(2) Where—
(a) a return is amended under section 28A(2)(b), 28B(2)(b) or 28B(4), and
(b) the amendment is not made for the purpose mentioned in subsection (1)(b) above,
sections 43(2), 43A and 43B apply in relation to the amendment as they apply in relation to any assessment under section 29.
(3) References to an assessment in sections 36(3), 43(2), 43A and 43B, as they apply by virtue of subsection (1) or (2) above, shall accordingly be read as references to the amendment of the return.
(4) Where it is necessary to make any adjustment by way of an assessment on any person—
(a) in order to give effect to a consequential claim, or
(b) as a result of allowing a consequential claim,
the assessment is not out of time if it is made within one year of the final determination of the claim.
For this purpose a claim is not taken to be finally determined until it, or the amount to which it relates, can no longer be varied, on appeal or otherwise.
(5) In subsection (4) above “consequential claim” means any claim, supplementary claim, election, application or notice that may be made or given under section 36(3), 43(2) or 43A (as it applies by virtue of subsection (1) or (2) above or otherwise).
.
(2) In section 43A of that Act (further assessments: claims etc), in subsection (2A) (elections to which extension of time limit does not apply) for the words from “an election under” to the end substitute
an election under—
(a) section 257BA of the principal Act (election as to transfer of married couple’s allowance), or
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) section 35(5) of the Taxation of Chargeable Gains Act 1992 (election for assets to be re-based to 1982).
.
(3) So far as it applies in relation to an amendment of a return, this section applies only where the notice of the amendment is issued after the day on which this Act is passed.
(1) The National Savings Bank Act 1971 (c. 29) is amended as follows.
(2) In section 3 (ordinary and investment deposits), after subsection (1) insert—
(1A) But subsection (1) is subject to any provision made in relation to ordinary accounts or ordinary deposits by regulations under section 2 of this Act made by virtue of section 8(3) of this Act.
.
(3) Section 6 (interest on investment deposits) is amended as follows.
(4) In subsection (2), for “Director of Savings may from time to time determine with the consent of the Treasury” substitute “ Treasury may from time to time determine ”.
(5) After that subsection insert—
((2ZA)) The Treasury may determine that a rate of interest payable on investment deposits, or investment deposits of a particular description, is to be a rate produced by the operation of a formula involving the movement of an index or indices or any other factor.
.
(6) In subsection (3), after “description” insert “ (other than one occasioned by the operation of a formula) ”.
(7) After that subsection insert—
(4) In the case of an alteration in a rate of interest not affecting deposits received before it is made, any notice of the alteration required to be given by subsection (3) above may be given after the alteration is made.
.
(8) Section 8 (regulations as to particular matters) is amended as follows.
(9) In subsection (1), after paragraph (b) insert—
(ba) for the issuing of cards for use in making investment deposits or in withdrawing cash from investment accounts (or both) and regulating the use of such cards;
.
(10) After subsection (2) insert—
(3) Regulations under section 2 of this Act may also make provision—
(a) prohibiting the opening of ordinary accounts after a prescribed date;
(b) prohibiting the opening of investment accounts of a prescribed description after a date prescribed in relation to that description of accounts;
(c) prohibiting the making of ordinary deposits after a prescribed date;
(d) prohibiting the making of deposits in investment accounts of a prescribed description after a date prescribed in relation to that description of accounts;
(e) requiring the withdrawal of all of the money deposited in any dormant account of a prescribed description if any of the money deposited in it is withdrawn after a date prescribed in relation to that description of account;
(f) for the transfer to investment accounts of a prescribed description of deposits in dormant accounts of a prescribed description;
(g) for the transfer to a special Director’s account of deposits in dormant accounts of a prescribed description or in accounts to which deposits have been transferred pursuant to provision made by virtue of paragraph (f) above.
(4) In subsection (3) above—
“dormant account” means an account in which deposits may not be made because of provision made by virtue of paragraph (c) or (d) of that subsection; and
“special Director’s account” means an investment account in the name of the Director of Savings in which deposits are held on behalf of the persons entitled to them.
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(11) After section 9 insert—
Investment account terms and conditions
9A (1) Any provision which may be made in relation to investment deposits by regulations under section 2 of this Act may, in the case of deposits in investment accounts of any description first made available after the passing of the Finance Act 2003, be included instead in the terms and conditions of the accounts.
(2) Any provision included in the terms and conditions of investment accounts under subsection (1) above has effect subject to regulations under section 2 of this Act and orders under section 4 of this Act.
(3) In this section “terms and conditions” means terms and conditions set by the Treasury and published by Director of Savings in a manner approved by the Treasury.
.
209 Abolition of accounting requirements relating to investment deposits
In section 120 of the Finance Act 1980 (c. 48) (investment deposits with National Savings Bank: accounting provisions etc), omit subsections (4) and (5) (which require the Director of Savings to keep an account of investment deposits etc and transmit annual statements to the Comptroller and Auditor General for examination etc).
(1) Section 15 of the National Loans Act 1968 (c. 13) (payments for service of national debt) is amended as follows.
(2) In subsection (1) (payments to be made out of Consolidated Fund into National Loans Fund), for “charges on the National Loans Fund for the service of national debt over” substitute
payments out of the National Loans Fund—
(a) which represent interest on liabilities of the National Loans Fund, or
(b) which, in the opinion of the Treasury, ought to be treated in the same way as payments which represent such interest,
over
.
(3) Omit subsection (3) (which defines “charges on the National Loans Fund for the service of national debt”).
(4) In paragraph 13 of Schedule 5A to that Act (Debt Management Account: payments to be made out of National Loans Fund into Debt Management Account), omit sub-paragraph (2) (payments to be treated as charges on the National Loans Fund for the service of national debt).
211 Definition of liabilities and assets of National Loans Fund
In section 19(4) of the National Loans Act 1968 (c. 13) (which defines as the liabilities of the National Loans Fund the nominal amount of the debt outstanding to it and as its assets its balance and loans etc outstanding to it), for the words from “of the National Loans Fund” onwards substitute “ and assets of the National Loans Fund shall be as determined by the Treasury. ”.
212 Accounts of Consolidated Fund and National Loans Fund
(1) Section 21 of the National Loans Act 1968 (accounts of Consolidated Fund and National Loans Fund) is amended as follows.
(2) In subsection (1) (annual accounts of payments in and out), for the words from “in such form” onwards substitute “ an account relating to the Consolidated Fund, and an account relating to the National Loans Fund, in such form and containing such information as the Treasury consider appropriate. ”.
(3) Omit subsection (3) (statements of additional information regarding transactions, assets and liabilities of Consolidated Fund and National Loans Fund).
(4) Subsection (2) has effect for the financial year ending with 31st March 2004 and subsequent financial years.
(5) Subsection (3) has effect for such financial year as the Treasury may by order made by statutory instrument appoint and subsequent financial years.
213 Debt Management Account: abolition of borrowing cap
In Schedule 5A to the National Loans Act 1968 (Debt Management Account), omit paragraph 8 (borrowings otherwise than from National Loans Fund not to exceed total standing to credit of that Account in that Fund and at Bank of England).
214 Payments in error from or to National Loans Fund
In paragraph 11 of Schedule 5A to the National Loans Act 1968 (c. 13) (payments between National Loans Fund and Debt Management Account in respect of difference between assets and liabilities of that Account), insert at the end—
(4) If any amount paid under sub-paragraph (1A) or (3) above should not have been paid, the Treasury may repay the whole or any part of it.
.
(1) The enactments mentioned in Schedule 43 to this Act (which include provisions that are spent or of no practical utility) are repealed to the extent specified.
(2) The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.
Section 19
1 In Part 3 of the Value Added Tax Act 1994 (c. 23) (application of Act in particular cases) insert after section 51A—
Face-value vouchers
51B Schedule 10A shall have effect with respect to face-value vouchers.
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2 After Schedule 10 to that Act insert—
SCHEDULE 10A
Face-value vouchers
Meaning of “face-value voucher” etc
1 (1) In this Schedule “face-value voucher” means a token, stamp or voucher (whether in physical or electronic form) that represents a right to receive goods or services to the value of an amount stated on it or recorded in it.
(2) References in this Schedule to the “face value” of a voucher are to the amount referred to in sub-paragraph (1) above.
Nature of supply
2 The issue of a face-value voucher, or any subsequent supply of it, is a supply of services for the purposes of this Act.
Treatment of credit vouchers
3 (1) This paragraph applies to a face-value voucher issued by a person who—
(a) is not a person from whom goods or services may be obtained by the use of the voucher, and
(b) undertakes to give complete or partial reimbursement to any such person from whom goods or services are so obtained.
Such a voucher is referred to in this Schedule as a “credit voucher”.
(2) The consideration for any supply of a credit voucher shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face value of the voucher.
(3) Sub-paragraph (2) above does not apply if any of the persons from whom goods or services are obtained by the use of the voucher fails to account for any of the VAT due on the supply of those goods or services to the person using the voucher to obtain them.
Treatment of retailer vouchers
4 (1) This paragraph applies to a face-value voucher issued by a person who—
(a) is a person from whom goods or services may be obtained by the use of the voucher, and
(b) if there are other such persons, undertakes to give complete or partial reimbursement to those from whom goods or services are so obtained.
Such a voucher is referred to in this Schedule as a “retailer voucher”.
(2) The consideration for the issue of a retailer voucher shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face value of the voucher.
(3) Sub-paragraph (2) above does not apply if—
(a) the voucher is used to obtain goods or services from a person other than the issuer, and
(b) that person fails to account for any of the VAT due on the supply of those goods or services to the person using the voucher to obtain them.
(4) Any supply of a retailer voucher subsequent to the issue of it shall be treated in the same way as the supply of a voucher to which paragraph 6 below applies.
Treatment of postage stamps
5 The consideration for the supply of a face-value voucher that is a postage stamp shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face value of the stamp.
Treatment of other kinds of face-value voucher
6 (1) This paragraph applies to a face-value voucher that is not a credit voucher, a retailer voucher or a postage stamp.
(2) A supply of such a voucher is chargeable at the rate in force under section 2(1) (standard rate) except where sub-paragraph (3), (4) or (5) below applies.
(3) Where the voucher is one that can only be used to obtain goods or services in one particular non-standard rate category, the supply of the voucher falls in that category.
(4) Where the voucher is used to obtain goods or services all of which fall in one particular non-standard rate category, the supply of the voucher falls in that category.
(5) Where the voucher is used to obtain goods or services in a number of different rate categories—
(a) the supply of the voucher shall be treated as that many different supplies, each falling in the category in question, and
(b) the value of each of those supplies shall be determined on a just and reasonable basis.
Vouchers supplied free with other goods or services
7 Where—
(a) a face-value voucher (other than a postage stamp) and other goods or services are supplied to the same person in a composite transaction, and
(b) the total consideration for the supplies is no different, or not significantly different, from what it would be if the voucher were not supplied,
the supply of the voucher shall be treated as being made for no consideration.
Interpretation
8 (1) In this Schedule—
“credit voucher” has the meaning given by paragraph 3(1) above;
“face value” has the meaning given by paragraph 1(2) above;
“face value voucher” has the meaning given by paragraph 1(1) above;
“retailer voucher” has the meaning given by paragraph 4(1) above.
(2) For the purposes of this Schedule—
(a) the “rate categories” of supplies are—
(i) supplies chargeable at the rate in force under section 2(1) (standard rate),
(ii) supplies chargeable at the rate in force under section 29A (reduced rate),
(iii) zero-rated supplies, and
(iv) exempt supplies and other supplies that are not taxable supplies;
(b) the “non-standard rate categories” of supplies are those in sub-paragraphs (ii), (iii) and (iv) of paragraph (a) above;
(c) goods or services are in a particular rate category if a supply of those goods or services falls in that category.
(3) A reference in this Schedule to a voucher being used to obtain goods or services includes a reference to the case where it is used as part-payment for those goods or services.
.
3 In Schedule 6 to the Value Added Tax Act 1994 (c. 23) (valuation: special cases), omit paragraph 5 (vouchers etc).
4 The amendments made by this Schedule apply to supplies of tokens, stamps or vouchers issued on or after 9th April 2003.
SCHEDULE 2A Transactions entered into before completion of contract
Pre-completion transactions
1 (1) This Schedule applies where—
(a) a person (“the original purchaser”) enters into a contract (“the original contract”) for the acquisition by that person of a chargeable interest under which the acquisition is to be completed by a conveyance, and
(b) there is a pre-completion transaction.
(2) A transaction is a “pre-completion transaction” for the purposes of sub-paragraph (1) if—
(a) as a result of the transaction a person other than the original purchaser (“the transferee”) becomes entitled to call for a conveyance to that person of the whole or part of the subject-matter of the original contract, and
(b) immediately before the transaction took place a person was entitled under the original contract to call for a conveyance of the whole or part of that subject-matter.
(3) A transaction that effects a person's acquisition of the whole or part of the subject-matter of the original contract is not a pre-completion transaction.
(4) The grant or assignment of an option is not a pre-completion transaction.
(5) The fact that a transaction has the effect of discharging the original contract does not prevent that transaction from being a pre-completion transaction.
(6) The reference in sub-paragraph (1)(a) to a contract does not include a contract that is an assignment of rights in relation to another contract.
(7) In this Schedule references to “part of the subject-matter of the original contract”—
(a) are to a chargeable interest that is the same as the chargeable interest referred to in sub-paragraph (1)(a) except that it relates to part only of the land concerned, and
(b) also include, so far as is appropriate, interests or rights appurtenant or pertaining to the chargeable interest.
(8) This Schedule does not apply where paragraph 12B of Schedule 17A (assignment of agreement for lease) applies.
Other key expressions
2 (1) A pre-completion transaction is an “assignment of rights” if the entitlement of the transferee referred to in paragraph 1(2)(a) is an entitlement to exercise rights under the original contract.
(2) A pre-completion transaction other than an assignment of rights is referred to in this Schedule as a “free-standing transfer”.
(3) In this Schedule “the transferor”, in relation to a pre-completion transaction, means a party to the pre-completion transaction who immediately before the pre-completion transaction took place was entitled to call for a conveyance of (what became) the subject-matter of the pre-completion transaction.
(4) References in this Schedule to the “subject-matter” of a pre-completion transaction—
(a) are to the chargeable interest the conveyance of which the transferee is entitled to call for as a result of the pre-completion transaction, and
(b) include, so far as appropriate, any interest or right appurtenant or pertaining to the chargeable interest.
Tax not charged on transferee by reason of the pre-completion transaction
3 The transferee is not regarded as entering into a land transaction by reason of the pre-completion transaction.
Assignments of rights: application of rules about completion and consideration
4 (1) This paragraph applies if the pre-completion transaction is an assignment of rights.
(2) If the subject-matter of the original contract is conveyed to the transferee, the conveyance is taken to effect the completion of the original contract (despite section 44(10)).
(3) Sub-paragraphs (4) to (6) apply if—
(a) the subject-matter of the original contract is conveyed to the transferee, or
(b) the original contract is substantially performed by the transferee.
(4) The transferee is taken to be the purchaser under the land transaction effected as mentioned in section 44(3), or treated as effected under section 44(4).
(5) For the purpose of determining the chargeable consideration for that land transaction, the land transaction is taken to give effect to a contract the consideration under which is—
(a) the consideration under the original contract, and
(b) the consideration for the assignment of rights.
Paragraph 1 of Schedule 4 has effect accordingly (but this sub-paragraph does not allow any amount of consideration given by a person to be counted twice in determining the chargeable consideration).
(6) In any case in which there is a relevant connection between parties as mentioned in paragraph 12(2) (minimum consideration rule), the chargeable consideration for the land transaction mentioned in sub-paragraph (4) of this paragraph is calculated (regardless of whether the consideration is taken to be the amount in paragraph (a), (b) or (c) of sub-paragraph 12(2)), as if in paragraph 1(1) of Schedule 4 the words, “or a person connected with him” were omitted.
(7) The original contract is said to be “substantially performed by the transferee” where a land transaction is treated under section 44(4) as effected by reason of—
(a) the transferee under the assignment of rights, or a person connected with the transferee, taking possession of the whole, or substantially the whole, of the subject-matter of the original contract, or
(b) a substantial amount of the consideration being paid or provided by the transferee or a person connected with the transferee, or
(c) consideration paid or provided by a person within paragraph (b) amounting, when taken together with consideration paid or provided by another person, to a substantial amount of the consideration.
(8) References in sub-paragraph (7) to possession and to the payment or provision of a substantial amount of the consideration are to be read in accordance with section 44(6) and (7).
(9) In sub-paragraph (5) “the consideration”—
(a) in relation to the land transaction, means (what is to be taken to be) the consideration for the acquisition of the subject-matter of the land transaction;
(b) in relation to the original contract, means the consideration for the acquisition of the subject-matter of that contract;
(c) in relation to the assignment of rights, means the consideration for the transferee's acquisition of the rights to which that contract relates.
Assignment of rights: transferor treated as making separate acquisition
5 (1) Where paragraph 4(4) to (6) applies (assignment of rights: original contract completed or substantially performed) this Part of this Act has effect as if—
(a) the effective date of the land transaction mentioned in paragraph 4(4) (“the transferee's land transaction”) were also the effective date of another land transaction (a “notional land transaction”), and
(b) the original purchaser were the purchaser under that notional land transaction.
The notional land transaction is referred to below as “associated with” the assignment of rights under which the original purchaser is the transferor.
(2) Where sub-paragraph (1) applies and the assignment of rights mentioned in paragraph 4(1) (“the implemented assignment of rights”) was preceded by one or more related assignments of rights, then for the purposes of this Part of this Act there is taken to be, for each assignment of rights (other than the first) in the chain formed by the implemented assignment of rights and those preceding assignments of rights, an additional land transaction in the case of which—
(a) the effective date is the effective date of the transferee's land transaction, and
(b) the purchaser is the transferor under that assignment of rights.
The additional land transaction is referred to below as “associated with” the assignment of rights.
(3) For the purpose of determining the chargeable consideration for the notional land transaction, Schedule 4 has effect as if paragraph 1(1) of that Schedule provided that the chargeable consideration is (except as otherwise expressly provided) the total of amounts A and B.
(4) For the purpose of determining the chargeable consideration for any additional land transaction, Schedule 4 has effect as if paragraph 1(1) of that Schedule provided that the chargeable consideration is (except as otherwise expressly provided) the total of amounts A, B and C.
(5) For the purposes of sub-paragraphs (3) and (4)—
A is the total amount of any consideration in money or money's worth given (whether directly or indirectly) by any of the following as consideration under the original contract—
the transferee under the assignment of rights with which the notional land transaction or (as the case requires) the additional land transaction is associated;
where that assignment of rights is one in a chain of successive transactions that are pre-completion transactions in relation to the original contract (all having at least part of their subject-matter in common), the transferee under any subsequent pre-completion transaction in that chain;
a person connected with a person falling within paragraph (a) or (b);
B is the total amount of any other consideration in money or money's worth given as consideration under the original contract (directly or indirectly) by—
the purchaser (under the notional land transaction or, as the case requires, the additional land transaction), or
a person connected with the purchaser;
C is the amount of any consideration in money or money's worth given for the preceding assignment of rights by—
the purchaser (under the additional land transaction), or
a person connected with the purchaser.
(6) In the definition of amount C, “the preceding assignment of rights” means the assignment of rights as a result of which the purchaser became entitled to call for a conveyance of (what became) the subject-matter of the assignment of rights associated with the additional land transaction.
(7) In sub-paragraph (2) “related assignment of rights” means a transaction that is an assignment of rights in relation to the original contract and has some subject-matter in common with the implemented assignment of rights.
Paragraph 5: effect of rescission etc following substantial performance
6 (1) This paragraph applies where paragraph 5(1) (transferor treated as making separate acquisition) applies by virtue of the substantial performance by the transferee of the original contract.
(2) If the original contract is (to any extent) subsequently rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of paragraph 5(1), and any tax paid by virtue of paragraph 5(2), must (to that extent) be repaid by HMRC.
(3) Repayment under sub-paragraph (2) must be claimed by amendment of the land transaction return made in respect of the notional or additional land transaction.
Assignment of rights relating to part only of subject-matter of original contract
7 Where the transferee under the assignment of rights referred to in paragraph 4(1) is entitled to call for the conveyance of part, but not the whole, of the subject-matter of the original contract—
(a) paragraph 4 applies as if the original contract, so far as relating to that part of its subject-matter, were a separate contract, and
(b) the references in paragraph 5 to the original contract are to be read accordingly.
Assignment of rights: references to “the vendor”
8 (1) This paragraph applies where—
(a) the pre-completion transaction is an assignment of rights, and
(b) either the subject-matter of the original contract is conveyed to the transferee or the original contract is substantially performed by the transferee.
(2) This paragraph does not apply if the original contract is itself a free-standing transfer. See paragraphs 10 and 11 for the treatment of such cases.
(3) In relation to a relevant land transaction, the general rule is that references in this Part of this Act to the vendor are to be read as references to the vendor under the original contract (but see sub-paragraphs (4) and (5)).
(4) In cases where the original contract was substantially performed before the transferee became entitled to call for a conveyance of the whole or part of the subject-matter of the original contract, references in this Part of this Act to the vendor are to be read as references to the person who was the purchaser under the original contract when it was substantially performed.
(5) In relation to a relevant land transaction, references to the vendor in the specified provisions (see sub-paragraph (6)) are to be read as including—
(a) the vendor under the original contract, and
(b) the transferor under any relevant assignment of rights.
(6) The specified provisions are—
(a) section 61(1)(a) (compliance with planning obligations: conditions for exemption);
(b) section 66(1) and (2) (transfers involving public bodies);
(c) paragraph 8(1)(a) of Schedule 4 (debt as consideration);
(d) paragraph 10(2)(c) of Schedule 4 (carrying out of works);
(e) paragraph 16 of Schedule 4 (indemnity given by vendor).
(7) The following are “relevant land transactions”—
(a) the land transaction effected by the conveyance mentioned in sub-paragraph (1)(b) or treated as effected by the substantial performance mentioned in that provision;
(b) the notional land transaction mentioned in paragraph 5(1)(b) and any additional land transaction under paragraph 5(2).
(8) In determining under section 108(1) whether or not a relevant land transaction such as is mentioned in sub-paragraph (7)(a) is linked to another transaction, it may be assumed that any of the following is the vendor under the relevant land transaction—
(a) the vendor (determined in accordance with sub-paragraph (3)), or
(b) the transferor under any relevant assignment of rights.
(9) The following are “relevant assignments of rights” in relation to a relevant land transaction—
(a) the assignment of rights mentioned in sub-paragraph (1)(a);
(b) any other transaction that is an assignment of rights in relation to the original contract and has some subject-matter in common with the assignment of rights mentioned in paragraph (a).
Free-standing transfers: consideration and substantial performance
9 (1) This paragraph applies where the pre-completion transaction is a free-standing transfer.
(2) If the transferee acquires the subject-matter of the free-standing transfer, the consideration for the transaction effecting that acquisition is taken to include the consideration given for the free-standing transfer (if that would not otherwise be the case).
(3) References in sub-paragraph (2) to an acquisition include an acquisition deemed to take place under section 44(4) (and the reference to the transaction effecting that acquisition is read accordingly).
(4) An action taken by the transferee (or an assignee of the transferee) that would, if taken by the original purchaser, constitute (for the purposes of section 44(5)) the taking of possession of the whole or substantially the whole of the subject-matter of the original contract is treated as effecting the substantial performance of the original contract.
(5) If a transaction that is a free-standing transfer in relation to a contract is also a free-standing transfer in relation to another contract (in particular, where there have been successive free-standing transfers), each of those contracts may be regarded as “the original contract” for the purposes of separate applications of sub-paragraph (4).
(6) In sub-paragraph (4)—
(a) the reference to the transferee includes a person connected with the transferee, and
(b) the reference to an assignee of the transferee includes a person connected with such a person.
(7) References in this paragraph to an assignee of the transferee are to a person who, as a result of a transaction that is an assignment of rights in relation to the free-standing transfer, is entitled to call for a conveyance of the whole or part of the subject-matter of the free-standing transfer.
Meaning of “the vendor”: cases involving free-standing transfers
10 (1) This paragraph applies where—
(a) a land transaction is effected, or treated as effected, by an acquisition falling within paragraph 9(2) (read with paragraph 9(3)), or
(b) paragraph 8(1) (meaning of “vendor” where the transferee is the assignee under an assignment of rights) would apply but for paragraph 8(2) (exclusion of cases where the original contract is itself a free-standing transfer).
(2) In this paragraph “the relevant land transaction” means the land transaction—
(a) mentioned in sub-paragraph (1)(a), or
(b) in a case falling within sub-paragraph (1)(b), effected by the conveyance to the transferee of the subject-matter of the original contract or the substantial performance by the transferee of the original contract.
(3) References in this paragraph to “the specified transaction” are to—
(a) the free-standing transfer mentioned in paragraph 9(2), or
(b) the original contract the subject-matter of which is conveyed to the transferee or which is substantially performed by the transferee.
(4) The general rule is that in relation to the relevant land transaction references in this Part of this Act to “the vendor” are to be read as references to the vendor or (as the case may be) transferor under the first appropriate transaction (but see sub-paragraph (5)).
(5) In relation to the relevant land transaction, references to the vendor in the specified provisions (see sub-paragraph (6)) are to be read as including—
(a) the vendor under the first appropriate transaction, and
(b) each person who is the transferor in the case of a relevant pre-completion transaction.
(6) The specified provisions are—
(a) section 61(1)(a) (compliance with planning obligations: conditions for exemption);
(b) section 66(1) and (2) (transfers involving public bodies);
(c) paragraph 8(1)(a) of Schedule 4 (debt as consideration);
(d) paragraph 10(2)(c) of Schedule 4 (carrying out of works);
(e) paragraph 16 of Schedule 4 (indemnity given by vendor).
(7) In determining under section 108(1) whether or not the relevant land transaction is linked to another transaction it may be assumed that any of the following is the vendor under the relevant land transaction—
(a) the vendor (determined under sub-paragraph (4)), or
(b) the transferor under any relevant pre-completion transaction.
(8) The following are “relevant pre-completion transactions” in relation to the relevant land transaction—
(a) the specified transaction;
(b) any other transaction that is a pre-completion transaction in relation to the original contract and has some subject-matter in common with the specified transaction.
Paragraph 10: “the first appropriate transaction” and “the original contract”
11 (1) Subject to the following provisions of this paragraph, “the first appropriate transaction” means the original contract.
(2) If the original contract is not performed at the same time as, and in connection with the performance of, the specified transaction, “the first appropriate transaction” means a transaction that is a pre-completion transaction in relation to the original contract and meets the following conditions.
(3) The conditions are that the pre-completion transaction—
(a) is performed at the time when the specified transaction is performed and (if it is not itself the specified transaction) is performed in connection with the performance of the specified transaction,
(b) is a transaction on which the entitlement of the transferee to call for the conveyance of the subject-matter of the specified transaction depends, and
(c) is not preceded by another pre-completion transaction meeting the conditions in paragraphs (a) and (b).
(4) For the purposes of this paragraph—
(a) a contract for a land transaction is taken to be “performed” when it is substantially performed or completed (whichever is earlier);
(b) a free-standing transfer other than a contract is taken to be “performed” when the transferee under that free-standing transfer (or an assignee of that transferee, as defined in paragraph 9(7)) acquires the subject-matter of that free-standing transfer.
(5) Where the specified transaction is a pre-completion transaction in relation to each of two or more contracts such as are mentioned in paragraph 1(1)(a) that together form a series of such contracts (each having some subject-matter in common with all the others), references in paragraph 10 and this paragraph to “the original contract” are to be read as references to the first contract in that series.
(6) In this paragraph “the specified transaction” has the meaning given by paragraph 10(3).
Minimum consideration rule
12 (1) This paragraph applies where either of the following provisions applies—
(a) paragraph 4(3) (assignment of rights: chargeable interest acquired or treated as acquired by transferee);
(b) paragraph 9(2) (free-standing transfers: chargeable interest acquired or treated as acquired by transferee).
(2) If there is a relevant connection between parties, then for the purposes of paragraph 1(1) of Schedule 4 the consideration given by the purchaser for the subject-matter of the land transaction referred to in paragraph 4(4) or 9(2) is taken to be—
(a) the amount that it would be apart from this sub-paragraph, or
(b) (if higher) the first minimum amount, or
(c) (if higher than both those amounts) the second minimum amount.
(3) There is a “relevant connection between parties” if—
(a) the persons who are the transferor and transferee in relation to the pre-completion transaction mentioned in paragraph 4(1) or 9(1) (“the implemented transaction”) are connected with each other, or are not acting at arm's length, or
(b) sub-paragraph (4) applies.
(4) This sub-paragraph applies if—
(a) the implemented transaction is one in a chain of successive transactions (all having at least part of their subject-matter in common) that are pre-completion transactions in relation to the original contract, and
(b) a person who is the transferor in relation to a pre-completion transaction that precedes the implemented transaction in the chain of transactions is connected with, or not acting at arm's length in relation to, the transferee under the implemented transaction.
(5) Where the implemented transaction is a pre-completion transaction in relation to—
(a) a contract for a land transaction that is not itself a free-standing transfer in relation to any other contract, and
(b) a contract, or two or more successive contracts, that are themselves free-standing transfers in relation to the contract mentioned in paragraph (a),
references in this paragraph to “the original contract” are to the contract mentioned in paragraph (a) (and do not include any contract mentioned in paragraph (b)).
The first minimum amount
13 (1) “The first minimum amount” means—
(a) if the chargeable interest acquired (or treated as acquired) under the land transaction referred to in paragraph 4(4) or 9(2) is the whole subject-matter of the original contract, the amount of any consideration (in money or money's worth) agreed to be given, under the terms of the original contract, for the acquisition of that subject-matter, or
(b) if paragraph (a) does not apply, so much of the amount mentioned in paragraph (a) as is referable, on a just and reasonable apportionment, to the chargeable interest mentioned in that paragraph.
This is subject to sub-paragraph (2).
(2) If conditions A to C are met, “the first minimum amount” means the amount of any consideration (in money or money's worth) agreed, under the terms of the transfer to the first T, to be given in respect of the subject-matter of that transaction (including any consideration relating to an obligation of the transferor under the transfer to the first T).
(3) The conditions mentioned in sub-paragraph (2) are as follows.
Condition A is that the pre-completion transaction referred to in paragraph 4(4) or 9(2) is one of a chain of successive transactions (all having at least part of their subject-matter in common) that are pre-completion transactions in relation to the original contract.
Condition B is that a person (“T”) is the transferor under a pre-completion transaction that forms part of that chain and T is connected with, or not acting at arm's length in relation to—
the transferee under that transaction, or
the transferee under a subsequent transaction in the chain.
Condition C is that having regard to all the circumstances it would not be reasonable to conclude that the obtaining of a tax advantage (for any person) was the main purpose, or one of main purposes, of T in entering into—
any pre-completion transaction in the chain, or
any arrangements of which such a transaction forms part.
(4) Where conditions A to C are met, “the first T” means—
(a) if condition B is met in relation to only one pre-completion transaction, T, or
(b) if condition B is met in relation to more than one pre-completion transaction in the chain, the transferor in relation to the first of the pre-completion transactions in relation to which condition B is met.
(5) In this paragraph “the transfer to the first T” means—
(a) the pre-completion transaction under which the first T is the transferee, or
(b) the original contract (if T is the original purchaser).
(6) In this paragraph—
(a) references to “the original contract” are to be read in accordance with paragraph 12(5) (and references to the original purchaser are to be read accordingly);
(b) “tax advantage” has the same meaning as in paragraph 18.
The second minimum amount
14 (1) In paragraph 12 “the second minimum amount” means the total of the net amounts of consideration given by the relevant parties.
(2) The net amount of consideration given by any relevant party is—
CP−CR
where—
CP is the total amount of consideration given by the party for the acquisition of the chargeable interest or as consideration for a pre-completion transaction;
CR is the total of any amounts of consideration given to the party by another relevant party (or other relevant parties) as consideration for the acquisition of the chargeable interest or as consideration for a pre-completion transaction.
If CR is greater than CP, the net amount of consideration given by the relevant party is taken to be zero.
(3) Except where sub-paragraph (4) applies, the relevant parties for the purposes of this paragraph are—
(a) the original purchaser, and
(b) the transferee.
(4) If the pre-completion transaction referred to in paragraph 4(4) or 9(2) (“the implemented transaction”) is one in a chain of successive transactions (having at least part of their subject-matter in common) that are pre-completion transactions in relation to the original contract, only the following are relevant parties—
(a) the persons who are the transferor and transferee in relation to the implemented transaction;
(b) a person who is the transferor in relation to preceding transaction, if that person is connected with, or not acting at arm's length in relation to, the transferee under the implemented transaction,
(c) the transferee under a pre-completion transaction, if the transferor is a relevant party (whether by virtue of this paragraph (c) or otherwise).
(5) For the purposes of sub-paragraph (2)—
(a) amounts given by a person connected with a relevant party are treated as given by the relevant party;
(b) amounts given to a person connected with a relevant party are treated as given to the relevant party.
References in this paragraph to a person connected with a relevant party do not include a person who is a relevant party.
(6) If the subject-matter of the implemented transaction is not the whole subject-matter of the original contract—
(a) the amounts that are taken for the purposes of sub-paragraph (2) to be given “for the acquisition of the chargeable interest” are to be determined on a just and reasonable basis, and
(b) only so much of the consideration for a preceding transaction as is referable, on a just and reasonable apportionment, to the subject-matter of the implemented transaction is taken into account under sub-paragraph (2).
(7) In this paragraph—
(a) references to “the original contract” are to be read in accordance with paragraph 12(5) (and references to “the original purchaser” are to be read accordingly);
(b) “preceding transaction” means a pre-completion transaction that precedes the implemented transaction in a chain of successive pre-completion transactions (all having at least part of their subject-matter in common).
Relief for transferor: assignment of rights
15 (1) This paragraph applies where—
(a) a person would, in the absence of this paragraph, be liable to pay tax in respect of a notional land transaction deemed to take place under paragraph 5(1) or an additional land transaction deemed to take place under paragraph 5(2), and
(b) the original contract had not been substantially performed when the assignment of rights mentioned in paragraph 4(1) was entered into.
(2) If the purchaser claims relief under this paragraph in respect of the notional land transaction or additional land transaction, no liability to tax arises in respect of that transaction.
(3) Sub-paragraph (2) does not apply if the land transaction mentioned in paragraph 4(4) is exempt from charge by virtue of any of sections 71A to 73 (which relate to alternative property finance).
(4) Relief under this section must be claimed in a land transaction return or an amendment of such a return.
Relief for original purchaser: qualifying subsales
16 (1) This paragraph applies if—
(a) the pre-completion transaction is a qualifying subsale,
(b) the original purchaser would, in the absence of this paragraph, be liable to pay tax in respect of a land transaction effected by the completion of the original contract or deemed to be effected by the substantial performance of the original contract,
(c) the performance of the qualifying subsale takes place at the same time as, and in connection with, the performance of the original contract, and
(d) relief is claimed in respect of the land transaction mentioned in paragraph (b).
(2) If the subject-matter of the qualifying subsale is the whole of the subject-matter of the original contract, no liability to tax arises in respect of the land transaction.
(3) If the subject-matter of the qualifying subsale is part (but not the whole) of the subject-matter of the original contract, the amount of the consideration for the land transaction is taken to be—
(a) the amount that it would be apart from this subsection, less
(b) so much of that amount as is referable to the subject-matter of the qualifying subsale.
(4) The amount mentioned in sub-paragraph (3)(a) may be reduced more than once under sub-paragraph (3) if there is more than one qualifying subsale.
(5) Sub-paragraphs (2) to (4) do not apply if—
(a) the original contract had been substantially performed when the qualifying subsale was entered into, or
(b) the transaction effected, or deemed to be effected, by the performance of the qualifying subsale is exempt from charge by virtue of any of sections 71A to 73.
(6) Relief under this section must be claimed in a land transaction return or an amendment of a land transaction return.
(7) For the purposes of this paragraph a contract for a land transaction is taken to be “performed” when it is substantially performed or completed (whichever is earlier).
(8) A pre-completion transaction is a “qualifying subsale” if it is a contract under which the original purchaser contracts to sell the whole or part of the subject-matter of the original contract to the transferee.
Application of paragraph 16 to successive subsales
17 If a transaction is a qualifying subsale in relation to more than one contract such as is mentioned in paragraph 1(1)(a), paragraph 16 is to be applied separately in relation to each such original contract for the purpose of determining what relief, if any, may be available with respect to the land transaction in question.
Tax avoidance arrangements
18 (1) Relief may not be claimed—
(a) under paragraph 15 if the assignment of rights referred to in sub-paragraph (1)(b) of that paragraph forms part of any tax avoidance arrangements, or
(b) under paragraph 16 if the qualifying subsale referred to in sub-paragraph (1)(c) of that paragraph forms part of any tax avoidance arrangements.
(2) Arrangements are “tax avoidance arrangements” if, having regard to all the circumstances, it would be reasonable to conclude that the obtaining of a tax advantage for the original purchaser or any other person was the main purpose, or one of the main purposes, of the original purchaser in entering into the arrangements.
(3) In this paragraph “tax advantage” means—
(a) a relief from tax or increased relief from tax,
(b) a repayment of tax or increased repayment of tax,
(c) the avoidance or reduction of a charge to tax, or
(d) the avoidance of a possible assessment to tax.
(4) In this paragraph “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
(5) Nothing in paragraphs 12 to 14 (minimum consideration rule) or this paragraph affects the breadth of the application of sections 75A to 75C (anti-avoidance).
Exclusion of transactions from duty to make returns etc
19 (1) The Treasury may by regulations amend this Schedule, or any provision of this Part of this Act relating to the making of returns, so as to—
(a) exempt relevant purchasers of any specified description, or in specified circumstances, from the duty to deliver a land transaction return,
(b) provide for relief under paragraph 15 or 16 to be available without a claim in the case of any specified class of transactions, or
(c) provide that paragraph 5 does not apply in specified cases.
(2) In this paragraph “relevant purchaser” means a person who is the transferor under a pre-completion transaction.
Connected persons
20 Section 1122 of CTA 2010 (connected persons) applies for the purposes of this Schedule.
Interpretation of Schedule
21 (1) In this Schedule—
“assignment of rights” has the meaning given by paragraph 2(1);
“contract” includes any agreement;
“conveyance” includes any instrument;
“free-standing transfer” has the meaning given by paragraph 2(2);
“pre-completion transaction” (in relation to a contract such as is mentioned in paragraph 1(1)) has the meaning given by paragraph 1(2);
“qualifying subsale” has the meaning given by paragraph 16(8);
“the transferee”, in relation to a pre-completion transaction, has the meaning given by paragraph 1(2)(a);
“the transferor”, in relation to a pre-completion transaction, has the meaning given by paragraph 2(3).
(2) In this Schedule—
(a) references to “the original contract” are to be read in accordance with paragraph 1(1)(a);
(b) references to “the original purchaser” are to be read in accordance with paragraph 1(1)(a) and see also sub-paragraph (3);
(c) references to “part of the subject-matter of the original contract” are to be read in accordance with paragraph 1(7);
(d) references to the “subject-matter” of a pre-completion transaction are to be read in accordance with paragraph 2(4);
(e) references to substantial performance of the original contract “by the transferee” (in cases involving an assignment of rights) are to be read in accordance with paragraph 4(7).
(3) For any one contract for the acquisition of a chargeable interest there is only one original purchaser (disregarding cases involving joint purchasers).
SCHEDULE 3 Stamp duty land tax: transactions exempt from charge
Section 49
No chargeable consideration
1 A land transaction is exempt from charge if there is no chargeable consideration for the transaction.
Grant of certain leases by registered social landlords
2 (1) The grant of a lease of a dwelling is exempt from charge if the lease—
(a) is granted by a relevant housing provider to one or more individuals in accordance with arrangements to which this paragraph applies, and
(b) is for an indefinite term or is terminable by notice of a month or less.
(2) This paragraph applies to arrangements between a relevant housing provider and a housing authority under which the relevant housing provider provides, for individuals nominated by the authority in pursuance of its statutory housing functions, temporary rented accommodation which the relevant housing provider itself has obtained on a short-term basis.
The reference above to accommodation obtained by the relevant housing provider “on a short-term basis” is to accommodation leased to the relevant housing provider for a term of five years or less.
(2A) A “relevant housing provider” means—
(a) a non-profit registered provider of social housing, or
(b) a registered social landlord.
(3) A “housing authority” means—
(a) in relation to England and Wales—
(i) a principal council within the meaning of the Local Government Act 1972 (c. 70), or
(ii) the Common Council of the City of London;
(b) in relation to Scotland, a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994 (c. 39);
(c) in relation to Northern Ireland—
(i) the Department for Social Development in Northern Ireland, or
(ii) the Northern Ireland Housing Executive.
Transactions in connection with divorce etc
3 A transaction between one party to a marriage and the other is exempt from charge if it is effected—
(a) in pursuance of an order of a court made on granting in respect of the parties an order or decree for their divorce, the annulment of the marriage or their judicial separation;
(b) in pursuance of an order of a court made in connection with the dissolution or annulment of the marriage, or the parties' judicial separation, at any time after the granting of such an order or decree for divorce, annulment or judicial separation as is mentioned in paragraph (a);
(c) in pursuance of—
(i) an order of a court made at any time under section 22A, 23A or 24A of the Matrimonial Causes Act 1973 (c. 18), or
(ii) an incidental order of a court made under section 8(2) of the Family Law (Scotland) Act 1985 (c. 37) by virtue of section 14(1) of that Act;
(d) at any time in pursuance of an agreement of the parties made in contemplation or otherwise in connection with the dissolution or annulment of the marriage, their judicial separation or the making of a separation order in respect of them.
Assents and appropriations by personal representatives
3A (1) The acquisition of property by a person in or towards satisfaction of his entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge.
(2) Sub-paragraph (1) does not apply if the person acquiring the property gives any consideration for it, other than the assumption of secured debt.
(3) Where sub-paragraph (1) does not apply because of sub-paragraph (2), the chargeable consideration for the transaction is determined in accordance with paragraph 8A(1) of Schedule 4.
(4) In this paragraph—
“debt” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date, and
“secured debt” means debt that, immediately after the death of the deceased person, is secured on the property.
Transactions in connection with dissolution of civil partnership etc
3A. A transaction between one party to a civil partnership and the other is exempt from charge if it is effected —
(a) in pursuance of an order of a court made on granting in respect of the parties an order or decree for the dissolution or annulment of the civil partnership or their judicial separation;
(b) in pursuance of an order of a court made in connection with the dissolution or annulment of the civil partnership, or the parties' judicial separation, at any time after the granting of such an order or decree for dissolution, annulment or judicial separation as mentioned in paragraph (a);
(c) in pursuance of —
(i) an order of a court made at any time under any provision of Schedule 5 to the Civil Partnership Act 2004 that corresponds to section 22A, 23A or 24A of the Matrimonial Causes Act 1973, or
(ii) an incidental order of a court made under any provision of the Civil Partnership Act 2004 that corresponds to section 8(2) of the Family Law (Scotland) Act 1985 by virtue of section 14(1) of that Act of 1985;
(d) at any time in pursuance of an agreement of the parties made in contemplation of or otherwise in connection with the dissolution or annulment of the civil partnership, their judicial separation or the making of a separation order in respect of them.
Variation of testamentary dispositions etc
4 (1) A transaction following a person’s death that varies a disposition (whether effected by will, under the law relating to intestacy or otherwise) of property of which the deceased was competent to dispose is exempt from charge if the following conditions are met.
(2) The conditions are—
(a) that the transaction is carried out within the period of two years after a person’s death, and
(b) that no consideration in money or money’s worth other than the making of a variation of another such disposition is given for it.
(2A) Where the condition in sub-paragraph (2)(b) is not met, the chargeable consideration for the transaction is determined in accordance with paragraph 8A(2) of Schedule 4.
(3) This paragraph applies whether or not the administration of the estate is complete or the property has been distributed in accordance with the original dispositions.
Power to add further exemptions
5 (1) The Treasury may by regulations provide that any description of land transaction specified in the regulations is exempt from charge.
(2) The regulations may contain such supplementary, incidental and transitional provision as appears to the Treasury to be appropriate.
SCHEDULE 4 Stamp duty land tax: chargeable consideration
Section 50
Money or money’s worth
1 (1) The chargeable consideration for a transaction is, except as otherwise expressly provided, any consideration in money or money’s worth given for the subject-matter of the transaction, directly or indirectly, by the purchaser or a person connected with him.
(2) Section 1122 of the Corporation Tax Act 2010 (connected persons) applies for the purposes of sub-paragraph (1).
Value added tax
2 The chargeable consideration for a transaction shall be taken to include any value added tax chargeable in respect of the transaction, other than value added tax chargeable by virtue of an option to tax any land under Part 1 of Schedule 10 to the Value Added Tax Act 1994 (c. 23) made after the effective date of the transaction.
Postponed consideration
3 The amount or value of the chargeable consideration for a transaction shall be determined without any discount for postponement of the right to receive it or any part of it.
Just and reasonable apportionment
4 (1) For the purposes of this Part consideration attributable—
(a) to two or more land transactions, or
(b) in part to a land transaction and in part to another matter, or
(c) in part to matters making it chargeable consideration and in part to other matters,
shall be apportioned on a just and reasonable basis.
(2) If the consideration is not so apportioned, this Part has effect as if it had been so apportioned.
(3) For the purposes of this paragraph any consideration given for what is in substance one bargain shall be treated as attributable to all the elements of the bargain, even though—
(a) separate consideration is, or purports to be, given for different elements of the bargain, or
(b) there are, or purport to be, separate transactions in respect of different elements of the bargain.
Exchanges
5 (1) This paragraph applies to determine the chargeable consideration where one or more land transactions are entered into by a person as purchaser (alone or jointly) wholly or partly in consideration of one or more other land transactions being entered into by him (alone or jointly) as vendor.
(2) In this paragraph—
(a) “relevant transaction” means any of those transactions, and
(b) “relevant acquisition” means a relevant transaction entered into as purchaser and “relevant disposal” means a relevant transaction entered into as vendor.
(3) The following rules apply if the subject-matter of any of the relevant transactions is a major interest in land—
(a) where a single relevant acquisition is made, the chargeable consideration for the acquisition is—
(i) the amount determined under sub-paragraph (3A) in respect of the acquisition, or
(ii) if greater, the amount which would be the chargeable consideration for the acquisition ignoring paragraph 5;
(b) where two or more relevant acquisitions are made, the chargeable consideration for each relevant acquisition is—
(i) the amount determined under sub-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;
(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.
(4) The following rules apply if the subject-matter of none of the relevant transactions is a major interest in land—
(a) where a single relevant acquisition is made in consideration of one or more relevant disposals, the chargeable consideration for the acquisition is the amount or value of any chargeable consideration other than the disposal or disposals that is given for the acquisition;
(b) where two or more relevant acquisitions are made in consideration of one or more relevant disposals, the chargeable consideration for each relevant acquisition is the appropriate proportion of the amount or value of any chargeable consideration other than the disposal or disposals that is given for the acquisitions.
(5) For the purposes of sub-paragraph (4)(b) the appropriate proportion is—
MV
TMV
where—
MV is the market value of the subject-matter of the acquisition for which the chargeable consideration is being determined, and
TMV is the total market value of the subject-matter of all the relevant acquisitions.
(6) This paragraph has effect subject to—
paragraph 6 of this Schedule (partition etc: disregard of existing interest), ...
...
...
(7) This paragraph does not apply in a case to which paragraph 17 applies.
Partition etc: disregard of existing interest
6 In the case of a land transaction giving effect to a partition or division of a chargeable interest to which persons are jointly entitled, the share of the interest held by the purchaser immediately before the partition or division does not count as chargeable consideration.
Valuation of non-monetary consideration
7 Except as otherwise expressly provided, the value of any chargeable consideration for a land transaction, other than—
(a) money (whether in sterling or another currency), or
(b) debt as defined for the purposes of paragraph 8 (debt as consideration),
shall be taken to be its market value at the effective date of the transaction.
Debt as consideration
8 (1) Where the chargeable consideration for a land transaction consists in whole or in part of—
(a) the satisfaction or release of debt due to the purchaser or owed by the vendor, or
(b) the assumption of existing debt by the purchaser,
the amount of debt satisfied, released or assumed shall be taken to be the whole or, as the case may be, part of the chargeable consideration for the transaction.
(1A) Where—
(a) debt is secured on the subject-matter of a land transaction immediately before and immediately after the transaction, and
(b) the rights or liabilities in relation to that debt of any party to the transaction are changed as a result of or in connection with the transaction,
then for the purposes of this paragraph there is an assumption of that debt by the purchaser, and that assumption of debt constitutes chargeable consideration for the transaction.
(1B) Where in a case in which sub-paragraph (1)(b) applies—
(a) the debt assumed is or includes debt secured on the property forming the subject-matter of the transaction, and
(b) immediately before the transaction there were two or more persons each holding an undivided share of that property, or there are two or more such persons immediately afterwards,
the amount of secured debt assumed shall be determined as if the amount of that debt owed by each of those persons at a given time were the proportion of it corresponding to his undivided share of the property at that time.
(1C) For the purposes of sub-paragraph (1B), ... each joint tenant of property is treated as holding an equal undivided share of it.
(2) If the effect of this paragraph would be that the amount of the chargeable consideration for the transaction exceeded the market value of the subject-matter of the transaction, the amount of the chargeable consideration is treated as limited to that value.
(3) In this paragraph—
(a) “debt” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date,
(b) “existing debt”, in relation to a transaction, means debt created or arising before the effective date of, and otherwise than in connection with, the transaction, and
(c) references to the amount of a debt are to the principal amount payable or, as the case may be, the total of the principal amounts payable, together with the amount of any interest that has accrued due on or before the effective date of the transaction.
Cases where conditions for exemption not fully met
8A (1) Where a land transaction would be exempt from charge under paragraph 3A of Schedule 3 (assents and appropriations by personal representatives) but for sub-paragraph (2) of that paragraph (cases where person acquiring property gives consideration for it), the chargeable consideration for the transaction does not include the amount of any secured debt assumed.
“Secured debt” has the same meaning as in that paragraph.
(2) Where a land transaction would be exempt from charge under paragraph 4 of Schedule 3 (variation of testamentary dispositions etc) but for a failure to meet the condition in sub-paragraph (2)(b) of that paragraph (no consideration other than variation of another disposition), the chargeable consideration for the transaction does not include the making of any such variation as is mentioned in that sub-paragraph.
Conversion of amounts in foreign currency
9 (1) References in this Part to the amount or value of the consideration for a transaction are to its amount or value in sterling.
(2) For the purposes of this Part the sterling equivalent of an amount expressed in another currency shall be ascertained by reference to the London closing exchange rate on the effective date of the transaction (unless the parties have used a different rate for the purposes of the transaction).
Carrying out of works
10 (1) Where the whole or part of the consideration for a land transaction consists of the carrying out of works of construction, improvement or repair of a building or other works to enhance the value of land, then—
(a) to the extent that the conditions specified in sub-paragraph (2) are met, the value of the works does not count as chargeable consideration, and
(b) to the extent that those conditions are not met, the value of the works shall be taken into account as chargeable consideration.
(2) The conditions referred to in sub-paragraph (1) are—
(a) that the works are carried out after the effective date of the transaction,
(b) that the works are carried out on land acquired or to be acquired under the transaction or on other land held by the purchaser or a person connected with him, and
(c) that it is not a condition of the transaction that the works are carried out by the vendor or a person connected with him.
(2A) Where by virtue of—
(a) subsection (8) of section 44 (contract and conveyance),
(b) paragraph 12A of Schedule 17A (agreement for lease), or
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
there are two notifiable transactions (the first being the contract or agreement and the second being the transaction effected on completion or, as the case may be, the grant or execution of the lease), the condition in sub-paragraph (2)(a) is treated as met in relation to the second transaction if it is met in relation to the first.
(3) In this paragraph—
(a) references to the acquisition of land are to the acquisition of a major interest in it;
(b) the value of the works shall be taken to be the amount that would have to be paid in the open market for the carrying out of the works in question.
(4) Section 839 of the Taxes Act 1988 (connected persons) has effect for the purposes of this paragraph.
(5) This paragraph is subject to paragraph 17 (arrangements involving public or educational bodies).
Provision of services
11 (1) Where the whole or part of the consideration for a land transaction consists of the provision of services (other than the carrying out of works to which paragraph 10 applies), the value of that consideration shall be taken to be the amount that would have to be paid in the open market to obtain those services.
(2) This paragraph is subject to paragraph 17 (arrangements involving public or educational bodies).
Land transaction entered into by reason of employment
12 (1) Where a land transaction is entered into by reason of the purchaser’s employment, or that of a person connected with him, then—
(a) if the transaction gives rise to a charge to tax under Chapter 5 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (taxable benefits: living accommodation) and—
(i) no rent is payable by the purchaser, or
(ii) the rent payable by the purchaser is less than the cash equivalent of the benefit calculated under section 105 or 106 of that Act,
there shall be taken to be payable by the purchaser as rent an amount equal to the cash equivalent chargeable under those sections;
(b) if the transaction would give rise to a charge under that Chapter but for section 99 of that Act (accommodation provided for performance of duties), the consideration for the transaction is the actual consideration (if any);
(c) if neither paragraph (a) nor paragraph (b) applies, the consideration for the transaction shall be taken to be not less than the market value of the subject-matter of the transaction as at the effective date of the transaction.
(2) Section 839 of the Taxes Act 1988 (connected persons) has effect for the purposes of this paragraph.
Obligations under lease
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Surrender of existing lease in return for new lease
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reverse premium
15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indemnity given by purchaser
16 Where the purchaser agrees to indemnify the vendor in respect of liability to a third party arising from breach of an obligation owed by the vendor in relation to the land that is the subject of the transaction, neither the agreement nor any payment made in pursuance of it counts as chargeable consideration.
Purchaser bearing inheritance tax liability
16A Where—
(a) there is a land transaction that is—
(i) a transfer of value within section 3 of the Inheritance Tax Act 1984 (transfers of value), or
(ii) a disposition, effected by will or under the law of intestacy, of a chargeable interest comprised in the estate of a person immediately before his death,
and
(b) the purchaser is or becomes liable to pay, agrees to pay or does in fact pay any inheritance tax due in respect of the transfer or disposition,
his liability, agreement or payment does not count as chargeable consideration for the transaction.
Purchaser bearing capital gains tax liability
16B (1) Where—
(a) there is a land transaction under which the chargeable interest in question—
(i) is acquired otherwise than by a bargain made at arm’s length, or
(ii) is treated by section 18 of the Taxation of Chargeable Gains Act 1992 (connected persons) as so acquired,
and
(b) the purchaser is or becomes liable to pay, or does in fact pay, any capital gains tax due in respect of the corresponding disposal of the chargeable interest,
his liability or payment does not count as chargeable consideration for the transaction.
(2) Sub-paragraph (1) does not apply if there is chargeable consideration for the transaction (disregarding the liability or payment referred to in sub-paragraph (1)(b)).
Costs of enfranchisement
16C Costs borne by the purchaser under section 9(4) of the Leasehold Reform Act 1967 or section 33 of the Leasehold Reform, Housing and Urban Development Act 1993 (costs of enfranchisement) do not count as chargeable consideration.
Arrangements involving public or educational bodies
17. (1) This paragraph applies in any case where arrangements are entered into under which—
(a) there is a transfer, or the grant or assignment of a lease, of land by a qualifying body (“A”) to a non-qualifying body (“B”) (“the main transfer”),
(b) in consideration (whether in whole or in part) of the main transfer there is a grant by B to A of a lease or under-lease of the whole, or substantially the whole, of that land (“the leaseback”),
(c) B undertakes to carry out works or provide services to A, and
(d) some or all of the consideration given by A to B for the carrying out of those works or the provision of those services is consideration in money,
whether or not there is also a transfer, or the grant or assignment of a lease, of any other land by A to B (a “transfer of surplus land”).
(2) The following are qualifying bodies—
(a) public bodies within section 66,
(b) institutions within the further education sector or the higher education sector within the meaning of 91 of the Further and Higher Education Act 1992,
(c) further education corporations within the meaning of section 17 of that Act,
(ca) sixth form college corporations within the meaning of section 90 of that Act,
(d) higher education corporations within the meaning section 90 of that Act,
(e) persons who undertake to establish and maintain, and carry on, or provide for the carrying on, of an Academy within the meaning of section 1 of the Academies Act 2010 , and
(f) in Scotland, institutions funded by the Scottish Further Education Funding Council or the Scottish Higher Education Funding Council.
(3) The following shall not count as chargeable consideration for the main transfer or any transfer of surplus land—
(a) the lease-back;
(b) the carrying out of building works by B for A; or
(c) the provision of services by B to A.
(4) The chargeable consideration for the lease back does not include—
(a) the main transfer;
(b) any transfer of surplus land; or
(c) the consideration in money paid by A to B for the building works or other services referred to in sub-paragraph (3).
(4A) Sub-paragraphs (3) and (4) shall be disregarded for the purposes of determining whether the land transaction in question is notifiable.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) In this paragraph “under-lease” includes a sub-lease.
SCHEDULE 4ZA Stamp duty land tax: higher rates for additional dwellings and dwellings purchased by companies
PART 1 Higher rates
1 (1) In its application for the purpose of determining the amount of tax chargeable in respect of a chargeable transaction which is a higher rates transaction, section 55 (amount of tax chargeable: general) has effect with the modification in sub-paragraph (2).
(2) In subsection (1B) of section 55, for Table A substitute—
TABLE A: RESIDENTIAL
Part of relevant consideration | Percentage
So much as does not exceed £125,000 | 5%
So much as exceeds £125,000 but does not exceed £250,000 | 7%
So much as exceeds £250,000 but does not exceed £925,000 | 10%
So much as exceeds £925,000 but does not exceed £1,500,000 | 15%
The remainder (if any) | 17%
PART 2 Meaning of “higher rates transaction”
Meaning of “higher rates transaction” etc
2 (1) This paragraph explains how to determine whether a chargeable transaction is a “higher rates transaction” for the purposes of paragraph 1.
(2) In the case of a transaction where there is only one purchaser, determine whether the transaction falls within any of paragraphs 3 to 7; if it does fall within any of those paragraphs it is a “higher rates transaction” (otherwise it is not).
(3) In the case of a transaction where there are two or more purchasers—
(a) take one of the purchasers and determine, having regard to that purchaser only, whether the transaction falls within any of paragraphs 3 to 7, and
(b) do the same with each of the other purchasers.
If the transaction falls within any of those paragraphs when having regard to any one of the purchasers it is a “higher rates transaction” (otherwise it is not).
(3A) Sub-paragraphs (2) and (3) are subject to paragraph 9A (spouses and civil partners purchasing from one another).
(4) For the purposes of this Schedule any term of years absolute or leasehold estate is not a “major interest” if its term does not exceed 7 years on the date of its grant.
(5) References in this Schedule to a major interest in a dwelling include an undivided share in a major interest in a dwelling.
Single dwelling transactions
3 (1) A chargeable transaction falls within this paragraph if—
(a) the purchaser is an individual,
(b) the main subject-matter of the transaction consists of a major interest in a single dwelling (“the purchased dwelling”), and
(c) Conditions A to D are met.
(1A) But sub-paragraph (1) is subject to paragraph 7A.
(2) Condition A is that the chargeable consideration for the transaction is £40,000 or more.
(3) Condition B is that on the effective date of the transaction the purchased dwelling—
(a) is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or
(b) is subject to such a lease but the lease has an unexpired term of no more than 21 years.
(4) Condition C is that at the end of the day that is the effective date of the transaction—
(a) the purchaser has a major interest in a dwelling other than the purchased dwelling,
(b) that interest has a market value of £40,000 or more, and
(c) that interest is not reversionary on a lease which has an unexpired term of more than 21 years.
(5) Condition D is that the purchased dwelling is not a replacement for the purchaser's only or main residence.
(6) For the purposes of sub-paragraph (5) the purchased dwelling is a replacement for the purchaser's only or main residence if—
(a) on the effective date of the transaction (“the transaction concerned”) the purchaser intends the purchased dwelling to be the purchaser's only or main residence,
(b) in another land transaction (“the previous transaction”) whose effective date was during the period of three years ending with the effective date of the transaction concerned, the purchaser or the purchaser's spouse or civil partner at the time disposed of a major interest in another dwelling (“the sold dwelling”),
(ba) immediately after the effective date of the previous transaction, neither the purchaser nor the purchaser's spouse or civil partner had a major interest in the sold dwelling,
(c) at any time during the period of three years referred to in paragraph (b) the sold dwelling was the purchaser's only or main residence, and
(d) at no time during the period beginning with the effective date of the previous transaction and ending with the effective date of the transaction concerned has the purchaser or the purchaser's spouse or civil partner acquired a major interest in any other dwelling with the intention of it being the purchaser's only or main residence.
(6A) Sub-paragraph (6)(ba) does not apply in relation to a spouse or civil partner of the purchaser if the two of them were not living together (see paragraph 9(3)) on the effective date of the transaction concerned.
(7) For the purposes of sub-paragraph (5) the purchased dwelling is also a replacement for the purchaser's only or main residence if—
(a) on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser's only or main residence,
(b) in another land transaction whose effective date is during a permitted period, the purchaser or the purchaser's spouse or civil partner disposes of a major interest in another dwelling (“the sold dwelling”),
(ba) immediately after the effective date of that other land transaction, neither the purchaser nor the purchaser's spouse or civil partner has a major interest in the sold dwelling, and
(c) at any time during the period of three years ending with the effective date of the transaction concerned the sold dwelling was the purchaser's only or main residence.
(7A) For the purposes of sub-paragraph (7)(b), the permitted periods are—
(a) the period of three years beginning with the day after the effective date of the transaction concerned, or
(b) if HMRC are satisfied that the purchaser or the purchaser's spouse or civil partner would have disposed of the major interest in the sold dwelling within that three year period but was prevented from doing so by exceptional circumstances that could not reasonably have been foreseen, such longer period as HMRC may allow in response to an application made in accordance with sub-paragraph (7B).
(7B) An application for the purposes of sub-paragraph (7A)(b) must—
(a) be made within the period of 12 months beginning with the effective date of the transaction disposing of the major interest in the sold dwelling, and
(b) be made in such form and manner, and contain such information, as may be specified by HMRC.
(7C) Schedule 11A (claims not included in returns) does not apply in relation to an application made in accordance with sub-paragraph (7B).
(8) Sub-paragraph (7)(ba) does not apply in relation to a spouse or civil partner of the purchaser if the two of them are not living together (see paragraph 9(3)) on the effective date of that other land transaction.
4 A chargeable transaction falls within this paragraph if—
(a) the purchaser is not an individual,
(b) the main subject-matter of the transaction consists of a major interest in a single dwelling, and
(c) Conditions A and B in paragraph 3 are met.
Multiple dwelling transactions
5 (1) A chargeable transaction falls within this paragraph if—
(a) the purchaser is an individual,
(b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), and
(c) at least two of the purchased dwellings meet conditions A, B and C.
(2) A purchased dwelling meets condition A if the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the purchased dwelling is £40,000 or more.
(3) A purchased dwelling meets condition B if on the effective date of the transaction the purchased dwelling—
(a) is not subject to a lease upon which the main subject-matter of the transaction is reversionary, or
(b) is subject to such a lease but the lease has an unexpired term of no more than 21 years.
(4) A purchased dwelling meets condition C if it is not subsidiary to any of the other purchased dwellings.
(5) One of the purchased dwellings (“dwelling A”) is subsidiary to another of the purchased dwellings (“dwelling B”) if—
(a) dwelling A is situated within the grounds of, or within the same building as, dwelling B, and
(b) the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to dwelling B is equal to, or greater than, two thirds of the amount of the chargeable consideration for the transaction which is attributable on a just and reasonable basis to the following combined—
(i) dwelling A,
(ii) dwelling B, and
(iii) each of the other purchased dwellings (if any) which are situated within the grounds of, or within the same building as, dwelling B.
6 (1) A chargeable transaction falls within this paragraph if—
(a) the purchaser is an individual,
(b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”),
(c) only one of the purchased dwellings meets conditions A, B and C,
(d) the purchased dwelling which meets those conditions is not a replacement for the purchaser's only or main residence, and
(e) at the end of the day that is the effective date of the transaction—
(i) the purchaser has a major interest in a dwelling other than one of the purchased dwellings,
(ii) that interest has a market value of £40,000 or more, and
(iii) that interest is not reversionary on a lease which has an unexpired term of more than 21 years.
(1A) But sub-paragraph (1) is subject to paragraph 7A.
(2) Sub-paragraphs (2) to (5) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph.
(3) Sub-paragraphs (6) to (8) of paragraph 3 apply for the purposes of sub-paragraph (1)(d) of this paragraph as they apply for the purposes of sub-paragraph (5) of that paragraph.
7 (1) A chargeable transaction falls within this paragraph if—
(a) the purchaser is not an individual,
(b) the main subject-matter of the transaction consists of a major interest in two or more dwellings (“the purchased dwellings”), and
(c) at least one of the purchased dwellings meets conditions A and B.
(2) Sub-paragraphs (2) and (3) of paragraph 5 apply for the purposes of sub-paragraph (1)(c) of this paragraph as they apply for the purposes of sub-paragraph (1)(c) of that paragraph.
Exception where purchaser has prior interest in purchased dwelling
7A (1) A chargeable transaction which would (but for this paragraph) fall within paragraph 3 or paragraph 6 does not fall within that paragraph if—
(a) the purchaser had a major interest (“the prior interest”) in the relevant purchased dwelling immediately before the effective date of the transaction, and
(b) the relevant purchased dwelling had been the purchaser's only or main residence throughout the period of three years ending with the effective date of the transaction.
(2) Sub-paragraph (1) does not apply if—
(a) the prior interest is a term of years absolute or a leasehold estate, and
(b) immediately before the effective date of the transaction, the remaining term of the prior interest is less than 21 years.
(3) Sub-paragraph (1) does not apply if immediately before the effective date of the transaction—
(a) the purchaser is beneficially entitled as a joint tenant to the prior interest, and
(b) there are more than three other joint tenants.
(4) Sub-paragraph (1) does not apply if immediately before the effective date of the transaction the purchaser is beneficially entitled as a tenant in common or coparcener to less than a quarter of the prior interest.
(5) In this paragraph “relevant purchased dwelling” means—
(a) the purchased dwelling mentioned in paragraph 3(1)(b), or (as the case may be)
(b) the purchased dwelling which meets the conditions mentioned in paragraph 6(1)(c).
PART 3 Supplementary provisions
Further provision in connection with paragraph 3(6) and (7)
8 (1) This paragraph applies where by reason of paragraph 3(7) a chargeable transaction (“the transaction concerned”) is not a higher rates transaction for the purposes of paragraph 1.
(2) The land transaction (“the subsequent transaction”) by reference to which the condition in paragraph 3(7)(b) is met may not be taken into account for the purposes of paragraph 3(6)(b) in determining whether any other chargeable transaction is a higher rates transaction.
(3) A land transaction return in respect of the transaction concerned may be amended, to take account of the application of paragraph 3(7) by virtue of paragraph 3(7A)(a), at any time within the period of 12 months beginning with—
(a) the effective date of the subsequent transaction, or
(b) if later, the filing date for the return.
(4) Where a land transaction return in respect of the transaction concerned is amended to take account of the application of paragraph 3(7) by virtue of paragraph 3(7A)(a) (and not for any other reason), paragraph 6(2A) of Schedule 10 (notice of amendment of return to be accompanied by the contract for the transaction etc) does not apply in relation to the amendment.
(5) Where HMRC grant an application made in accordance with paragraph 3(7B)—
(a) the land transaction return in respect of the transaction concerned is treated as having been amended to take account of the application of paragraph 3(7) by virtue of paragraph 3(7A)(b), and
(b) HMRC must notify the purchaser accordingly.
Spouses and civil partners purchasing alone
9 (1) Sub-paragraph (2) applies in relation to a chargeable transaction if—
(a) the purchaser (or one of them) is married or in a civil partnership on the effective date,
(b) the purchaser and the purchaser's spouse or civil partner are living together on that date, and
(c) the purchaser's spouse or civil partner is not a purchaser in relation to the transaction.
(2) The transaction is to be treated as being a higher rates transaction for the purposes of paragraph 1 if it would have been a higher rates transaction had the purchaser's spouse or civil partner been a purchaser.
(3) Persons who are married to, or are civil partners of, each other are treated as living together for the purposes of this Schedule if they are so treated for the purposes of the Income Tax Acts (see section 1011 of the Income Tax Act 2007).
Spouses and civil partners purchasing from one another
9A (1) A chargeable transaction is not a higher rates transaction for the purposes of paragraph 1 if—
(a) there is only one purchaser,
(b) there is only one vendor, and
(c) on the effective date of the transaction the two of them are—
(i) married to, or civil partners of, each other, and
(ii) living together (see paragraph 9(3)).
(2) Where—
(a) there are two purchasers in relation to a chargeable transaction, and
(b) one of them (“P”) is also the vendor in relation to the transaction,
P is to be treated for the purposes of sub-paragraph (1) as not being a purchaser.
(3) Where—
(a) there are two vendors in relation to a chargeable transaction, and
(b) one of them (“V”) is also the purchaser in relation to the transaction,
V is to be treated for the purposes of sub-paragraph (1) as not being a vendor.
Property adjustment on divorce, dissolution of civil partnership etc
9B (1) This paragraph applies where—
(a) a person (“A”) has a major interest in a dwelling,
(b) a property adjustment order has been made in respect of the interest for the benefit of another person (“B”), and
(c) the dwelling—
(i) is B's only or main residence, and
(ii) is not A's only or main residence.
(2) A is to be treated for the purposes of this Schedule as not having the interest in the dwelling.
(3) “Property adjustment order” means—
(a) an order under section 24(1)(b) of the Matrimonial Causes Act 1973 (property adjustment orders in connection with matrimonial proceedings),
(b) an order under section 17(1)(a)(ii) of the Matrimonial and Family Proceedings Act 1984 (property adjustment orders after overseas divorce) corresponding to such an order as is mentioned in paragraph (a),
(c) an order under Article 26(1)(b) of the Matrimonial Causes (Northern Ireland) Order 1978 (property adjustment orders in connection with divorce proceedings etc),
(d) an order under Article 21(a)(ii) of the Matrimonial and Family Proceedings (Northern Ireland) Order 1989 (property adjustment orders after overseas divorce) corresponding to such an order as is mentioned in paragraph (c),
(e) an order under paragraph 7(1)(b) of Schedule 5 or paragraph 7(1)(b) of Schedule 15 to the Civil Partnership Act 2004 (property adjustment orders in connection with dissolution etc of civil partnership), or
(f) an order under paragraph 9 of Schedule 7 or paragraph 9 of Schedule 17 to the Civil Partnership Act 2004 (property adjustment orders in connection with overseas dissolution etc of civil partnership) corresponding to such an order as is mentioned in paragraph (e).
Settlements and bare trusts
10 (1) Sub-paragraph (3) applies in relation to a land transaction if—
(a) the main subject-matter of the transaction consists of a major interest in one or more dwellings,
(b) the purchaser (or one of them) is acting as trustee of a settlement, and
(c) under the terms of the settlement a beneficiary will be entitled to—
(i) occupy the dwelling or dwellings for life, or
(ii) income earned in respect of the dwelling or dwellings.
(2) Sub-paragraph (3) also applies in relation to a land transaction if—
(a) the main subject-matter of the transaction consists of a term of years absolute in a dwelling, and
(b) the purchaser (or one of them) is acting as a trustee of a bare trust.
(3) Where this sub-paragraph applies in relation to a land transaction the beneficiary of the settlement or bare trust (rather than the trustee) is to be treated for the purposes of this Schedule as the purchaser (or as one of them).
(4) Paragraphs 3(3) and 4 of Schedule 16 (trustees to be treated as the purchaser) have effect subject to sub-paragraph (3).
11 (1) Sub-paragraph (3) applies where—
(a) a person is a beneficiary under a settlement,
(b) a major interest in a dwelling forms part of the trust property, and
(c) under the terms of the settlement, the beneficiary is entitled to—
(i) occupy the dwelling for life, or
(ii) income earned in respect of the dwelling.
(2) Sub-paragraph (3) also applies where—
(a) a person is a beneficiary under a bare trust, and
(b) a term of years absolute in a dwelling forms part of the trust property.
(3) Where this sub-paragraph applies—
(a) the beneficiary is to be treated for the purposes of this Schedule as holding the interest in the dwelling, and
(b) if the trustee of the settlement or bare trust disposes of the interest, the beneficiary is to be treated for the purposes of this Schedule as having disposed of it.
12 (1) This paragraph applies where, by reason of paragraph 10 or 11 or paragraph 3(1) of Schedule 16, the child of a person (“P”) would (but for this paragraph) be treated for the purposes of this Schedule as—
(a) being the purchaser in relation to a land transaction,
(b) holding an interest in a dwelling, or
(c) having disposed of an interest in a dwelling.
(1A) But this paragraph does not apply if the trustee (or any of the trustees) of the settlement or bare trust concerned—
(a) was the purchaser in relation to the land transaction,
(b) holds the interest in the dwelling, or
(c) disposed of the interest in the dwelling,
in the exercise of powers conferred on the trustee by reason of a relevant court appointment made in respect of the child concerned.
(1B) In sub-paragraph (1A) “relevant court appointment” means—
(a) an appointment under section 16 of the Mental Capacity Act 2005,
(b) an appointment under section 113 of the Mental Capacity Act (Northern Ireland) 2016, or
(c) an equivalent appointment under the law of a country or territory outside England, Wales and Northern Ireland.
(2) Where this paragraph applies—
(a) P and any relevant spouse or civil partner of P are to be treated for the purposes of this Schedule as being the purchaser, holding the interest or (as the case may be) having disposed of the interest, and
(b) the child is not to be so treated.
(3) For the purposes of sub-paragraph (2) a spouse or civil partner of P is “relevant” if the spouse or civil partner—
(a) is not a parent of the child, and
(b) is living together with P (see paragraph 9(3)).
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) “Child” means a person under the age of 18.
13 (1) This paragraph applies in relation to a land transaction if—
(a) the main subject-matter of the transaction consists of a major interest in one or more dwellings,
(b) the purchaser (or one of them) is acting as trustee of a settlement,
(c) that purchaser is an individual, and
(d) under the terms of the settlement a beneficiary is not entitled to—
(i) occupy the dwelling or dwellings for life, or
(ii) income earned in respect of the dwelling or dwellings.
(2) In determining whether the transaction falls within paragraph 4 or paragraph 7—
(a) if the purchaser mentioned in sub-paragraph (1) is the only purchaser, ignore paragraph (a) of those paragraphs, and
(b) if that purchaser is not the only purchaser, ignore paragraph (a) of those paragraphs when having regard to that purchaser.
Partnerships
14 (1) Sub-paragraph (2) applies in relation to a chargeable transaction whose subject-matter consists of a major interest in one or more dwellings if—
(a) the purchaser (or one of them) is a partner in a partnership, but
(b) the purchaser does not enter into the transaction for the purposes of the partnership.
(2) For the purposes of determining whether the transaction falls within paragraph 3 or 6 any major interest in any other dwelling that is held by or on behalf of the partnership for the purposes of a trade carried on by the partnership is not to be treated as held by or on behalf of the purchaser.
(3) Paragraph 2(1)(a) of Schedule 15 (chargeable interests held by partnerships treated as held by the partners) has effect subject to sub-paragraph (2).
Alternative finance arrangements
15 (1) This paragraph applies in relation to a chargeable transaction which is the first transaction under an alternative finance arrangement entered into between a person and a financial institution.
(2) The person (rather than the institution) is to be treated for the purposes of this Schedule as the purchaser in relation to the transaction.
(3) In this paragraph—
“alternative finance arrangement” means an arrangement of a kind mentioned in section 71A(1) or 73(1);
“financial institution” has the meaning it has in those sections (see section 73BA);
“first transaction”, in relation to an alternative finance arrangement, has the meaning given by section 71A(1)(a) or (as the case may be) section 73(1)(a)(i).
Major interests in dwellings inherited jointly
16 (1) This paragraph applies where by virtue of an inheritance—
(a) a person (“P”) becomes jointly entitled with one or more other persons to a major interest in a dwelling, and
(b) P's beneficial share in the interest does not exceed 50% (see sub-paragraph (4)).
(2) P is not to be treated for the purposes of paragraph 3(4)(a) or 6(1)(e) as having the major interest at any time during the period of three years beginning with the date of the inheritance.
(3) But if at any time during that period of three years P becomes the only person beneficially entitled to the whole of the interest or P's beneficial share in the interest exceeds 50% P is, from that time, to be treated as having the major interest for the purposes of paragraph 3(4)(a) and 6(1)(e) (subject to any disposal by P).
(4) P's share in the interest exceeds 50% if—
(a) P is beneficially entitled as a tenant in common or coparcener to more than half the interest,
(b) P and P's spouse or civil partner taken together are beneficially entitled as tenants in common or coparceners to more than half the interest, or
(c) P and P's spouse or civil partner are beneficially entitled as joint tenants to the interest and there is no more than one other joint tenant who is so entitled.
(5) In this section “inheritance” means the acquisition of an interest in or towards satisfaction of an entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person.
Dwellings outside England, ... and Northern Ireland
17 (1) In the provisions of this Schedule specified in sub-paragraph (3), references to a “dwelling” include references to a dwelling situated in a country or territory outside England... and Northern Ireland.
(1A) In the application of those provisions in relation to a dwelling situated in Wales—
(a) references to a “major interest” in the dwelling are to an interest in the dwelling of a kind mentioned in section 117(2),
(b) references to a “land transaction” in relation to the dwelling are to the acquisition of an interest in the dwelling, and
(c) references to the “effective date” of a land transaction in relation to the dwelling are to the date on which the interest in the dwelling is acquired.
(2) In the application of those provisions in relation to a dwelling situated in a country or territory outside England, Wales and Northern Ireland—
(a) references to a “major interest” in the dwelling are to an equivalent interest in the dwelling under the law of that country or territory,
(b) references to persons being beneficially entitled as joint tenants, tenants in common or coparceners to an interest in the dwelling are to persons having an equivalent entitlement to the interest in the dwelling under the law of that country or territory,
(c) references to a “land transaction” in relation to the dwelling are to the acquisition of an interest in the dwelling under the law of that country or territory,
(d) references to the “effective date” of a land transaction in relation to the dwelling are to the date on which the interest in the dwelling is acquired under the law of that country or territory,
(e) references to “inheritance” are to the acquisition of an interest from a deceased person's estate in accordance with the laws of that country or territory concerning the inheritance of property.
(3) The provisions of this Schedule referred to in sub-paragraphs (1), (1A) and (2) are—
(a) paragraph 3(4), (6)(b), (ba), (c) and (d) and (7)(b), (ba) and (c),
(b) paragraph 6(1)(e),
(ba) paragraph 9B,
(c) paragraph 11,
(d) paragraph 14(2), and
(e) paragraph 16.
(4) Where the child of a person (“P”) has an interest in a dwelling which is situated in a country or territory outside England... and Northern Ireland, P and any relevant spouse or civil partner of P are to be treated for the purposes of this Schedule as having that interest.
(5) For the purposes of sub-paragraph (4) a spouse or civil partner of P is “relevant” if the spouse or civil partner—
(a) is not a parent of the child, and
(b) is living together with P (see paragraph 9(3)).
(5A) Sub-paragraph (4) does not apply if the interest in the dwelling was acquired in the child's name or on the child's behalf by a person acting in exercise of powers conferred on that person by reason of a relevant court appointment made in respect of the child.
(5B) In sub-paragraph (5A) “relevant court appointment” has the meaning given by paragraph 12(1B).
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
What counts as a dwelling
18 (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
(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 that land) is taken to be part of that dwelling.
(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 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 use as a single dwelling, and
(c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed.
(6) In sub-paragraph (5)—
“contract” includes any agreement;
“relevant deeming provision” means any of sections 44 to 45A or paragraph 5(1) or (2) of Schedule 2A or paragraph 12A of Schedule 17A;
“substantially performed” has the same meaning as in section 44.
(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).
(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.
Power to modify this Schedule
19 (1) The Treasury may by regulations amend or otherwise modify this Schedule for the purpose of preventing certain chargeable transactions from being higher rates transactions for the purposes of paragraph 1.
(2) The provision which may be included in regulations under this paragraph by reason of section 114(6)(c) includes incidental or consequential provision which may cause a chargeable transaction to be a higher rates transaction for the purposes of paragraph 1.
SCHEDULE 4A Stamp duty land tax: higher rate for certain transactions
Meaning of “higher threshold interest”
1 (1) In this paragraph “interest in a single dwelling” means so much of the subject-matter of a chargeable transaction as consists of a chargeable interest in or over a single dwelling (together with appurtenant rights).
(2) An interest in a single dwelling is a higher threshold interest for the purposes of this Schedule if chargeable consideration of more than £500,000 is attributable to that interest.
Transactions involving a higher threshold interest
2 (1) Sub-paragraphs (2) to (8) apply to a chargeable transaction whose subject-matter consists of or includes a higher threshold interest.
(2) If the main subject-matter of the transaction consists entirely of higher threshold interests, the transaction is a high-value residential transaction for the purposes of paragraph 3.
(3) If the main subject-matter of the transaction includes a chargeable interest other than a higher threshold interest, the transaction (“the primary transaction”) is to be treated for the relevant purposes as two separate chargeable transactions as follows—
(a) a transaction whose subject-matter is all the higher threshold interests, together with any appurtenant rights;
(b) a transaction whose subject-matter is the remainder of the subject-matter of the primary transaction.
(4) For those purposes, the chargeable consideration for a transaction treated as occurring under sub-paragraph (3) is so much of the chargeable consideration for the primary transaction as is attributable to that transaction.
(5) The transaction mentioned in sub-paragraph (3)(a) is a high-value residential transaction for the purposes of paragraph 3.
(6) “Relevant purposes” means the purposes of—
(a) paragraphs 3 , 5 to 5L and 6A to 6I of this Schedule,
(b) section 55 (amount of tax chargeable: general),
(c) Schedule 5 (amount of tax chargeable: rent),
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(da) Schedule 7A (PAIF seeding relief and co-ownership scheme seeding relief), and
(e) any other provision of this Part, so far as it is necessary because of any of paragraphs (a) to (da) to treat the purposes in question as relevant purposes.
(7) If a transaction treated under sub-paragraph (3) as two separate transactions is notifiable, each of the separate transactions (but not the primary transaction) is also treated as a separate, and notifiable, transaction for the purposes of section 76 (duty to deliver land transaction return).
(8) The provisions relating to land transaction returns are to be read with any adjustments that may be necessary as a result of sub-paragraph (7).
(9) The reference in sub-paragraph (1) to a chargeable transaction does not include a transaction to which section 74 (exercise of collective rights by tenants of flats) or section 75 (crofting community right to buy) applies.
Amount of tax chargeable: higher rate for certain transactions
3 (1) Where this paragraph applies to a chargeable transaction—
(a) the amount of tax chargeable in respect of the transaction is 17% of the chargeable consideration for the transaction, and
(b) the transaction is not taken to be linked to any other transaction for the purposes of section 55(1B), (1C) and (4).
(2) This paragraph applies to a chargeable transaction if—
(a) the transaction is a high-value residential transaction, and
(b) the condition in sub-paragraph (3) is met.
(3) The condition is that—
(a) the purchaser is a company but is not a public body,
(b) the acquisition is made by or on behalf of the members of a partnership one or more of whose members is a company but is not a public body, or
(c) the acquisition is made for the purposes of a collective investment scheme.
(4) References in sub-paragraph (3) to a company do not include a company acting in its capacity as trustee of a settlement and, for the purposes of that sub-paragraph, whether a person is a public body is to be determined in accordance with section 66.
(5) If there are two or more purchasers acting jointly, the condition in sub-paragraph (3) is treated as met if it is met in relation to at least one of those purchasers.
(6) In relation to a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 17(2) of Schedule 15, sub-paragraph (3) has effect as if the following were substituted for paragraph (b) of that sub-paragraph—
(b) the purchasers (see paragraph 17(3) of Schedule 15) include a company, or
.
(7) In relation to an event that is a chargeable transaction by virtue of paragraph 17A(4) of that Schedule, sub-paragraph (3) has effect as if the following were substituted for paragraph (b) of that sub-paragraph—
(b) the purchasers (see paragraph 17A(5) of Schedule 15) include a company, or
.
(8) For the purposes of sub-paragraph (3), paragraph 3 of Schedule 16 (bare trustees) applies as if sub-paragraphs (2) and (3) of that paragraph were omitted.
(9) In the case of a transaction for which the whole or part of the chargeable consideration is rent, this paragraph has effect subject to section 56 and Schedule 5 (amount of tax chargeable: rent).
(10) The Treasury may by order amend this paragraph for the purpose of limiting the circumstances in which the condition in sub-paragraph (3) is to be treated as met.
Acquisitions of interests in the same dwelling through different transactions
4 (1) Sub-paragraphs (2) and (3) apply if—
(a) the subject-matter of a chargeable transaction includes a chargeable interest in or over a dwelling,
(b) one or more land transactions, the subject-matter of each of which includes a chargeable interest in or over the dwelling, are linked to that chargeable transaction, and
(c) the total consideration attributable to the interests mentioned in paragraphs (a) and (b) (and to any appurtenant rights, but disregarding any rent) is more than £500,000.
(2) Each of those chargeable interests is treated as a higher threshold interest for the purposes of this Schedule.
(3) If the condition in paragraph 3(3) is met in the case of the transaction mentioned in sub-paragraph (1)(a), it is also treated as met in the case of each transaction mentioned in sub-paragraph (1)(b) that is a chargeable transaction.
(4) The transactions referred to in this paragraph do not include any transaction to which section 74 (exercise of collective rights by tenants of flats) or section 75 (crofting community right to buy) applies.
Businesses of letting, trading in or redeveloping properties
5 (1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest that is acquired exclusively for one or more of the following purposes—
(a) exploitation as a source of rents or other receipts (other than excluded rents) in the course of a qualifying property rental business;
(aa) use as business premises for the purposes of a qualifying property rental business (other than one which gives rise to income consisting wholly or mainly of excluded rents);
(ab) use for the purposes of a relievable trade;
(b) development or redevelopment and—
(i) resale in the course of a property development trade, or
(ii) exploitation falling within paragraph (a) or use falling within paragraph (aa) or (ab);
(c) resale in the course of a property development trade (in a case where the chargeable transaction is part of a qualifying exchange);
(d) resale (as stock of the business) in the course of a property trading business.
(2) A chargeable interest does not count as being acquired exclusively for one or more of those purposes if it is intended that a non-qualifying individual will be permitted to occupy a dwelling on the land.
(3) In this paragraph—
“excluded rents” has the same meaning as in section 133 of the Finance Act 2013;
“property development trade” means a trade that—
consists of or includes buying and developing or redeveloping for resale residential or non-residential property, and
is run on a commercial basis and with a view to profit;
“part of a qualifying exchange” is to be construed in accordance with section 139(4) of the Finance Act 2013;
“property trading business” means a business that—
consists of or includes activities in the nature of a trade of buying and selling dwellings, and
is run on a commercial basis and with a view to profit;
“qualifying property rental business” has the same meaning as in section 133 of the Finance Act 2013.
“relievable trade” means a trade that is run on a commercial basis and with a view to profit.
Meaning of “non-qualifying individual”
5A (1) In paragraph 5 “non-qualifying individual”, in relation to a chargeable transaction, means any of the following—
(a) the purchaser (other than a purchaser entering into the transaction as a member of a partnership);
(b) a purchaser who enters into the transaction as a member of a partnership and has a major share in the partnership,
(c) an individual (a “connected person”) who is connected with the purchaser;
(d) a relevant settlor;
(e) the spouse or civil partner of a connected person or of a relevant settlor;
(f) a relative of a connected person or of a relevant settlor, or the spouse or civil partner of a relative of a connected person or of a relevant settlor;
(g) a relative of the spouse or civil partner of a connected person or of a relevant settlor;
(h) the spouse or civil partner of a person falling within paragraph (g);
(i) an individual who is a major participant in a relevant collective investment scheme or is connected with a major participant in a relevant collective investment scheme.
(2) A member of a partnership has a “major share” in the partnership if the member is entitled to a 50% or greater share—
(a) in the income profits of the partnership, or
(b) in the partnership's assets.
(3) A collective investment scheme is a “relevant collective investment scheme” for the purposes of sub-paragraph (1)(i) if the purchaser under the chargeable transaction referred to in that sub-paragraph acquires the subject-matter of the transaction for the purposes of that scheme.
(4) An individual who participates in a collective investment scheme is a “major participant” in the scheme if the individual—
(a) is entitled to a share of at least 50% either of all the profits or income arising from the scheme or of any profits or income arising from the scheme that may be distributed to participants, or
(b) would in the event of the winding up of the scheme be entitled to 50% or more of the assets of the scheme that would then be available for distribution among the participants.
(5) The reference in sub-paragraph (4)(a) to profits or income arising from a collective investment scheme is to profits or income arising from the acquisition, holding, management or disposal of the property subject to the scheme.
(6) In this paragraph—
“participant”, in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000;
“relative” means brother, sister, ancestor or lineal descendant;
“relevant settlor”, in relation to a chargeable transaction, means an individual who is a settlor in relation to a relevant settlement (as defined in sub-paragraph (7));
“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
(7) Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a chargeable transaction, that settlement is a “relevant settlement” in relation to the chargeable transaction.
(8) In sub-paragraph (7) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected persons”: supplementary).
(9) In this paragraph “the purchaser”, in relation to a chargeable transaction, is to be read as a reference to any of the purchasers (if there are more than one).
(10) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this paragraph, but for those purposes—
(a) subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded, and
(b) subsections (2) to (7) of section 172 of the Finance Act 2013 apply as they apply for the purposes of Part 3 of that Act.
Trades involving making a dwelling available to the public
5B (1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in relation to which the conditions in sub-paragraph (2) are met.
(2) The conditions are that—
(a) the higher threshold interest is acquired with the intention that it will be exploited as a source of income in the course of a qualifying trade, and
(b) reasonable commercial plans have been formulated to carry out that intention without delay (except so far as delay may be justified by commercial considerations or cannot be avoided).
(3) “Qualifying trade”, in relation to a higher threshold interest, means a trade that—
(a) is carried on on a commercial basis and with a view to profit, and
(b) involves, in its normal course, offering the public the opportunity to make use of, stay in or otherwise enjoy the dwelling as customers of the trade on at least 28 days in any calendar year.
(4) For the purposes of sub-paragraph (3), persons are not considered to have the opportunity to make use of, stay in or otherwise enjoy a dwelling unless the areas that they have the opportunity to make use of, stay in or otherwise enjoy include a significant part of the interior of the dwelling.
(5) The size (relative to the size of the whole dwelling), nature and function of any relevant area or areas in a dwelling are taken into account in determining whether they form a significant part of the interior of the dwelling.
Financial institutions acquiring dwellings in the course of lending
5C (1) Sub-paragraph (2) applies to a chargeable transaction if the purchaser is a financial institution carrying on a business that involves the lending of money.
(2) Paragraph 3 does not apply to the chargeable transaction so far as its subject-matter consists of a higher threshold interest that is acquired in the course of that business—
(a) for the purpose of resale in the course of the business and,
(b) in connection with those lending activities.
Acquisition under a regulated home reversion plan
5CA (1) Paragraph 3 does not apply to a chargeable transaction if (and so far as) the purchaser—
(a) is an authorised plan provider, and
(b) acquires the subject-matter of the chargeable transaction as a plan provider.
(2) For the purposes of this paragraph the purchaser acquires the subject-matter of the chargeable transaction “as a plan provider” so far as the purchaser acquires it under a regulated home reversion plan which the purchaser enters into as plan provider.
(3) In this paragraph—
“authorised plan provider” means a person authorised under the Financial Services and Markets Act 2000 to carry on in the United Kingdom the regulated activity specified in article 63B(1) of the Regulated Activities Order (entering into regulated home reversion plan as plan provider);
“the Regulated Activities Order” means the Financial Services and Markets (Regulated Activities) Order 2001 (S.I. 2001/544);
“regulated home reversion plan” means an arrangement which is a regulated home reversion plan for the purposes of Chapter 15A of Part 2 of the Regulated Activities Order.
(4) In this section references to entering into a regulated home reversion plan “as plan provider” are to be interpreted as if the references were in the Regulated Activities Order.
Dwellings for occupation by certain employees etc of a relievable business
5D (1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in relation to which the conditions in sub-paragraph (2) are met. Those conditions can only be met if the purchaser, or a relevant group member, carries on or is to carry on a relievable business.
(2) The conditions are that—
(a) the interest is acquired for the purpose of making the dwelling available to one or more qualifying employees or qualifying partners for use as living accommodation, and
(b) the dwelling is to be made available as mentioned in paragraph (a) for purposes that are solely or mainly purposes of the relievable business.
(3) For the purposes of the relief under this paragraph it does not matter whether or not the individuals mentioned in sub-paragraph (2)(a) are identified at the time of the chargeable transaction.
(4) “Relievable business” means a trade or property rental business that is run on a commercial basis and with a view to profit.
(5) In this paragraph references to making a dwelling available to a qualifying employee or qualifying partner include making it available to persons who are to share the accommodation with a qualifying employee or qualifying partner as that individual's family.
(6) Where the purchaser is a company, “relevant group member” means a company which is a member of the same group of companies as the purchaser for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief).
More about the condition in paragraph 5D(2)(a)
5E (1) In a case where the person carrying on the relievable business mentioned in paragraph 5D(1) carries it on in partnership with one or more other persons, “qualifying partner” means any individual who is a member of the partnership.
(2) “Qualifying employee” means an individual employed for the purposes of the relievable business.
(3) In a case falling within sub-paragraph (1), the condition in paragraph 5D(2)(a) is taken not to be met if the individuals, or a class of individuals, to whom it is proposed to make the dwelling available for use as living accommodation include, or are likely to include, a member of the partnership who is (or will at the relevant time be) entitled to a 10% or greater share—
(a) in the income profits of the partnership, or
(b) in any company beneficially entitled to the higher threshold interest mentioned in paragraph 5D(1), or
(c) in that higher threshold interest.
(4) In addition, the condition in paragraph 5D(2)(a) is taken not to be met if the individuals, or a class of individuals, to whom it is proposed to make the dwelling available for use as living accommodation include, or are likely to include, an individual employed for the purposes of the relievable business in question who is (or will at the relevant time be)—
(a) entitled to a 10% or greater share—
(i) in the income profits of the relievable business, or
(ii) in any company that is beneficially entitled to the higher threshold interest, or
(iii) in that higher threshold interest, or
(b) employed to provide excluded domestic services.
(5) The reference in sub-paragraph (4)(b) to an individual employed to provide excluded domestic services is to an individual the duties of whose employment include the provision of services in connection with the (actual or intended) occupation, by an individual to whom sub-paragraph (6) applies, of the dwelling mentioned in paragraph 5D(2)(a) (“the relevant dwelling”), or a linked dwelling.
(6) This sub-paragraph applies to any individual who is connected with a person who is or is to be beneficially entitled to the higher threshold interest.
(7) The following are “linked” dwellings for the purposes of sub-paragraph (5)—
(a) if the conditions in section 116(2) of the Finance Act 2013 are met in relation to the relevant dwelling and another dwelling, that other dwelling;
(b) a dwelling that is linked to the relevant dwelling, as described in section 117(1) of the Finance Act 2013.
(8) For the purposes of sub-paragraphs (3)(c) and (4)(a) persons who are entitled to a chargeable interest as beneficial joint tenants (or, in Scotland, as joint owners) are taken to be entitled to the chargeable interest as beneficial tenants in common (or, in Scotland, as owners in common) in equal shares.
(9) Section 147 of the Finance Act 2013 (meaning of “10% or greater share in a company”) applies for the purposes of this paragraph as for the purposes of section 146 of that Act.
(10) In this paragraph references to employment include the holding of an office.
Acquisition by management company of flat for occupation by caretaker
5EA (1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in or over a flat which—
(a) is one of at least three flats contained in the same premises, and
(b) is acquired by a tenants' management company for the purpose of making the flat available for use as caretaker accommodation.
(2) For the purposes of this paragraph a tenants' management company makes a flat available for use “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises.
(3) In relation to the acquisition of a flat, a company is a “tenants' management company” if—
(a) the tenants of two or more other flats contained in the premises are members of the company, and
(b) the company owns, or it is intended that the company will acquire, the freehold of the premises;
but a company which carries on a relievable business is not a tenants' management company.
(4) In this paragraph “premises” means premises constituting the whole or part of a building.
Farmhouses
5F (1) Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest in or over a dwelling—
(a) that is, or is to be, a farmhouse, and
(b) in relation to which the conditions in sub-paragraph (3) are met.
(2) The reference in sub-paragraph (1) to a dwelling that “is or is to be a farmhouse” is to a dwelling that forms part of land that is to be occupied, or to continue to be occupied, for the purposes of a qualifying trade of farming.
(3) The conditions are that—
(a) the dwelling is to be occupied for the purposes of that trade by a qualifying farm worker,
(b) reasonable commercial plans have been formulated under which such occupation is either to continue from the effective date of the chargeable transaction or to begin without delay (except so far as delay may be justified by commercial considerations or cannot be avoided), and
(c) occupation of the farmhouse by a qualifying farm worker is then expected to continue as part of the normal way in which the trade is, or is to be, carried on.
(4) In sub-paragraph (3) “qualifying farm worker” means an individual who occupies the dwelling for the purposes of the trade mentioned in that sub-paragraph and has a substantial involvement—
(a) in the day-to-day work of the trade, or
(b) in the direction and control of the conduct of the trade.
(5) “Qualifying trade of farming” means a trade of farming that is carried on—
(a) on a commercial basis, and
(b) with a view to profit.
(6) A person occupying part of a dwelling is regarded as occupying the dwelling for the purposes of this paragraph.
(7) In this paragraph—
(a) “farming” has the same meaning as in the Corporation Tax Acts (see section 1125 of CTA 2010), except that in this paragraph “farming” includes market gardening;
(b) “market gardening” has the same meaning as in the Corporation Tax Acts (see section 1125(5) of CTA 2010).
Qualifying housing co-operatives
5FA Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest that is acquired by a company on a day on which the company is a qualifying housing co-operative for the purposes of section 150(3A) of the Finance Act 2013 (relief from ATED).
Withdrawal of relief
5G (1) Sub-paragraph (2) applies where relief under paragraph 5 has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) a requirement in sub-paragraph (3) is not met.
(3) The requirements are that—
(a) the higher threshold interest (if still held by the purchaser) is held exclusively for one or more of the purposes mentioned in paragraph 5(1),
(b) any chargeable interest derived from the higher threshold interest that may be held by the purchaser is held exclusively for one or more of those purposes, and
(c) (if the higher threshold interest or a chargeable interest derived from it is held by the purchaser) no non-qualifying individual is permitted to occupy any dwelling on the land.
(4) The requirements in sub-paragraph (3)(a) and (b) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the purposes for which the higher threshold interest was acquired to be carried out.
(5) Sub-paragraph (6) applies if a higher threshold interest was acquired for a purpose mentioned in paragraph 5(1) but at some time in the control period the activity in question (for instance, exploitation of the interest as mentioned in paragraph 5(1)(a))—
(a) has not yet begun, or
(b) has ceased.
(6) For the purposes of sub-paragraph (3), the interest is taken to be held for the purpose in question only if reasonable steps are being taken to ensure that the purpose in question is carried out.
(7) In this paragraph “non-qualifying individual” (in relation to the chargeable transaction mentioned in sub-paragraph (1)) has the meaning given by paragraph 5A.
5H (1) This paragraph applies where relief under paragraph 5B (trades involving making a dwelling open to the public) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) a requirement in sub-paragraph (3) is not met.
(3) The requirements are that—
(a) the higher threshold interest (if still held by the purchaser), is being exploited as a source of income in the course of a qualifying trade, and
(b) any chargeable interest derived from that interest that may be held by the purchaser is being exploited as mentioned in paragraph (a).
(4) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the chargeable interest concerned to be exploited in the manner specified.
(5) Sub-paragraph (6) applies if at some time in the control period the higher threshold interest, or a chargeable interest derived from it—
(a) has not begun to be exploited as mentioned in sub-paragraph (3), or
(b) has ceased to be so exploited.
(6) The requirements in sub-paragraph (3) are treated as being met if reasonable steps are being taken to ensure that the chargeable interest in question begins to be exploited as mentioned in that sub-paragraph, or that such exploitation of the interest is resumed.
5I (1) This paragraph applies where relief under paragraph 5C (financial institutions acquiring dwellings in the course of lending) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if any requirement in sub-paragraph (3) is not met at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) (but see sub-paragraphs (4) and (5)).
(3) The requirements are that—
(a) the purchaser continues to be a financial institution carrying on a business that involves the lending of money, and
(b) the interest is held for the purpose of resale in the course of the business.
(4) The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—
(a) the higher threshold interest, or
(b) a chargeable interest that is derived from the higher threshold interest.
(5) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.
5IA (1) This paragraph applies where relief under paragraph 5CA (acquisition under a regulated home reversion plan) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction the purchaser holds the higher threshold interest otherwise than for the purposes of the regulated home reversion plan (as defined in paragraph 5CA).
(3) But sub-paragraph (2) does not apply if—
(a) after ceasing to hold the higher threshold interest for the purposes of the regulated home reversion plan, the purchaser sells the higher threshold interest without delay (except so far as delay is justified by commercial considerations or cannot be avoided), and
(b) at no time when the higher threshold interest is held by the purchaser as mentioned in sub-paragraph (2) is the dwelling (or any part of the dwelling) occupied by a non-qualifying individual.
(4) In this paragraph—
“the dwelling” means the dwelling to which the relief under paragraph 5CA relates;
“non-qualifying individual” is to be interpreted in accordance with paragraph 5A.
5J (1) This paragraph applies where relief under paragraph 5D (dwellings for occupation by certain employees etc) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if any requirement in sub-paragraph (3) is not met at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) (but see sub-paragraphs (4) and (5)).
(3) The requirements are that—
(a) the purchaser, or a relevant group member (as defined in paragraph 5D(6)), carries on a relievable business,
(b) the dwelling is made available as mentioned in paragraph 5D(2)(a), and
(c) the dwelling is made so available for purposes that are solely or mainly purposes of the relievable business.
(4) The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—
(a) the higher threshold interest, or
(b) a chargeable interest that is derived from the higher threshold interest.
(5) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.
(6) Sub-paragraph (7) applies if at some time in the control period the dwelling—
(a) has not begun to be made available as mentioned in sub-paragraph (3)(b) and (c), or
(b) has ceased to be so made available.
(7) The requirements in paragraphs (b) and (c) of sub-paragraph (3) are treated as being met if reasonable steps are being taken to ensure that the dwelling will begin to be, or will return to being, available as mentioned in those paragraphs.
5JA (1) This paragraph applies where relief under paragraph 5EA (acquisition by management company of flat for occupation by caretaker) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction the purchaser holds the higher threshold interest otherwise than for the purpose of making the flat available for use as caretaker accommodation.
(3) For the purposes of this paragraph a tenants' management company makes a flat available for use “as caretaker accommodation” if it makes it available to an individual for use as living accommodation in connection with the individual's employment as caretaker of the premises.
5K (1) This paragraph applies where relief under paragraph 5F (farmhouses) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction (“the control period”) the requirements in sub-paragraph (3) are not met (but see sub-paragraphs (4) and (5)).
(3) The requirements are that—
(a) the land mentioned in paragraph 5F(2) is occupied for the purposes of a qualifying trade of farming, and
(b) the dwelling is occupied for the purposes of that trade by a qualifying farm worker.
(4) The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—
(a) the higher threshold interest, or
(b) a chargeable interest that is derived from the higher threshold interest.
(5) The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.
(6) Sub-paragraph (7) applies if at some time in the control period a requirement in sub-paragraph (3)—
(a) has not begun to be met, or
(b) has ceased to be met.
(7) The requirement is treated as being met if reasonable steps are being taken to ensure that the requirement begins to be met, or is again met.
5L (1) This paragraph applies where relief under paragraph 5FA (qualifying housing co-operatives) has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.
(2) References in this paragraph to a qualifying housing body are to—
(a) a company that is a qualifying housing co-operative for the purposes of section 150(3A) of the Finance Act 2013 (relief from ATED),
(b) a registered provider of social housing, or
(c) a registered social landlord.
(3) The relief under paragraph 5FA is withdrawn (subject to sub-paragraph (4)) if—
(a) on any day in the period of three years beginning with the effective date of the chargeable transaction (“the control period”), the purchaser is not a qualifying housing body, and
(b) immediately before the first day on which that is the case the purchaser still holds the higher threshold interest or holds a chargeable interest derived from it.
(4) If, on any day in the control period, the purchaser is not a qualifying housing body because it ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless—
(a) another person (“the first successor”) has succeeded to the engagements of the purchaser, and
(b) condition A or condition B is met (and if condition B is met, subject to sub-paragraph (7)).
(5) Condition A is that, on the day the first successor succeeds to the engagements of the purchaser (“the day of succession”), the first successor is not a qualifying housing body.
(6) Condition B is that—
(a) on any day in the part of the control period that falls after the day of succession, the first successor is not a qualifying housing body, and
(b) immediately before the first day on which that is the case the first successor still holds the higher threshold interest or holds a chargeable interest derived from it.
(7) If condition B is met because the first successor ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless it would have been withdrawn by virtue of sub-paragraph (4) if references in sub-paragraphs (4) to (6)—
(a) to the purchaser were references to the first successor, and
(b) to the first successor were references to the person who has succeeded to the engagements of the first successor (“the second successor”).
(8) Sub-paragraph (7) is to apply to the second successor as it applies to the first successor, and so on, subject to the necessary modifications.
Partnerships: application of paragraph 2 to certain transactions
6 (1) Sub-paragraphs (2) and (3) apply where the subject-matter of a transaction to which Part 3 of Schedule 15 applies consists of or includes a higher threshold interest.
(2) The transaction is not to be treated as a high-value residential transaction by virtue of paragraph 2(2) unless the chargeable consideration for the transaction is more than £500,000.
(3) Paragraph 2(3) to (8) does not apply to the transaction if—
(a) the subject-matter of the transaction includes a chargeable interest other than a higher threshold interest, and
(b) the result of applying paragraph 2(3) and (4) would be that chargeable consideration of £500,000 or less would be attributable to the separate transaction mentioned in paragraph 2(3)(a).
(4) For the purposes of sub-paragraph (1) and paragraph 2, the subject-matter (and the main subject-matter) of a transfer of an interest in a partnership that is a chargeable transaction by virtue of sub-paragraph (2) of paragraph 14 of Schedule 15 is—
(a) if the transfer is a Type A transfer, the relevant partnership property as defined in sub-paragraph (5) of that paragraph, or
(b) if the transfer is a Type B transfer, the relevant partnership property as defined in sub-paragraph (5A) of that paragraph.
(5) For the purposes of sub-paragraph (1) and paragraph 2, the subject-matter (and the main subject-matter) of a transfer of an interest in a partnership that is a chargeable transaction by virtue of sub-paragraph (2) of paragraph 17 of Schedule 15 is the subject-matter of the land transfer referred to in sub-paragraph (1)(a) of that paragraph.
(6) For the purposes of sub-paragraph (1) and paragraph 2, the subject-matter (and the main subject-matter) of a chargeable transaction that is treated as occurring by virtue of sub-paragraph (4) of paragraph 17A of Schedule 15 is the subject-matter of the land transfer referred to in sub-paragraph (1)(a) of that paragraph.
Modifications for cases involving alternative finance arrangements
6A (1) This paragraph applies where—
(a) section 71A (land sold to financial institution and leased to person), section 72 (land in Scotland sold to financial institution and leased to person) or section 73 (land sold to financial institution and re-sold to person) applies, and
(b) the major interest in land purchased under the first transaction consists of or includes a higher threshold interest.
(2) In this paragraph “the first transaction” means—
(a) where section 71A applies, the transaction mentioned in section 71A(1)(a);
(b) where section 72 applies, the transaction mentioned in section 72(1)(a);
(c) where section 73 applies, the transaction mentioned in section 73(1)(a)(i).
(3) The condition in paragraph 3(3) is treated as being met with respect to the first transaction only if that condition is met with respect to the second transaction.
(4) If the second transaction would qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) , 5F(1) and 5FA (disregarding the exemptions in sections 71A(3), 72(3) and 73(3) and assuming, for this purpose, that the subject-matter of the second transaction is a higher threshold interest), the first transaction is taken to qualify for relief under the same provision (and accordingly paragraph 3 does not apply in relation to the first transaction).
(5) The first transaction does not qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) , 5F(1) or 5FA except in accordance with sub-paragraph (4).
(6) In this paragraph “the second transaction” has the same meaning as in section 71A, 72 or 73 (as the case requires).
6B (1) This paragraph applies where section 72A (land in Scotland sold to financial institution and person in common) applies and the major interest in land purchased under the transaction mentioned in section 72A(1)(a) (“the first transaction”) consists of or includes a higher threshold interest.
(2) In determining whether or not the first transaction meets the condition in paragraph 3(3) it is to be assumed that the financial institution referred to in section 72A(1) is not one of the persons acquiring the major interest in land under that transaction.
(3) Paragraphs 5 to 5F have effect in relation to the first transaction as they would have effect if the financial institution were not a purchaser under that transaction.
Paragraphs 6A and 6B: application where transaction is split under paragraph 2(3)
6C (1) Where paragraph 6A or 6B (“the modifying paragraph”) applies and the first transaction (within the meaning of that paragraph) is treated under paragraph 2(3) as two separate chargeable transactions, references in the modifying paragraph to the first transaction include those separate transactions.
(2) If the subject-matter of the second transaction (within the meaning of paragraph 6A) includes a chargeable interest other than a higher threshold interest, that fact is ignored in determining for the purposes of paragraph 6A—
(a) whether that transaction meets the condition in paragraph 3(3), or
(b) whether it would qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) , 5F(1) and 5FA.
Alternative finance arrangements: withdrawal of relief
6D (1) This paragraph applies where relief under paragraph 5 (businesses of letting, trading in or redeveloping properties) has been allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the first transaction (“the control period”) a relevant requirement is not met.
(3) The relevant requirements are that—
(a) any relevant interest (see sub-paragraphs (5) and (6)) held by the relevant person is held by that person exclusively for one or more of the purposes mentioned in paragraph 5(1), and
(b) (if a relevant interest is held by the relevant person) no non-qualifying individual is permitted to occupy any dwelling on the land concerned.
(4) For the purposes of sub-paragraph (3)(a) and (b) it does not matter whether the relevant interest is held by the relevant person—
(a) jointly or (in Scotland) in common, or
(b) otherwise.
(5) In relation to relief allowed in accordance with sub-paragraph 6A(4), “relevant interest” means any of the following—
(a) the interest acquired under the second transaction (within the meaning of paragraph 6A);
(b) any interest transferred to the relevant person as a result of the exercise of the right mentioned in section 71A(1)(d) or 72(1)(c);
(c) any chargeable interest derived from an interest such as is mentioned in paragraph (a) or (b).
(6) In relation to relief allowed in accordance with paragraph 6B(3), “relevant interest” means any of the following—
(a) the interest purchased under the first transaction (within the meaning of paragraph 6B);
(b) any interest transferred to the relevant person as a result of the exercise of the right mentioned in section 72A(1)(c);
(c) any chargeable interest derived from an interest such as is mentioned in paragraph (a) or (b).
(7) In this paragraph—
“non-qualifying individual” (in relation to the chargeable transaction mentioned in sub-paragraph (1)) has the meaning given by paragraph 5A;
“the relevant person” means the person (other than the financial institution) who entered into the arrangements in question as mentioned in section 71A(1), 72(1), 72A(1) or 73(1).
6E (1) The requirement in paragraph 6D(3)(a) does not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect the interest in question to be held for the purpose for which the relevant person acquired that person's initial interest.
(2) Sub-paragraph (3) applies if the relevant person's initial interest was acquired by the relevant person for a purpose mentioned in paragraph 5(1), but at some time in the control period the activity in question (for instance, exploitation as mentioned in paragraph 5(1)(a))—
(a) has not begun in the case of a relevant interest, or
(b) has ceased in the case of a relevant interest.
(3) For the purposes of paragraph 6D(3)(a) the relevant interest is taken to be held for the purpose in question only if reasonable steps are being taken to ensure that the purpose in question is carried out.
(4) In this paragraph—
(a) “the control period”, “relevant interest” and “the relevant person” have the same meaning as in paragraph 6D;
(b) references to the relevant person's “initial interest” are to the interest mentioned in sub-paragraph (5)(a) or (6)(a) of paragraph 6D (as the case requires).
6F (1) This paragraph applies where relief under paragraph 5B (trades involving making a dwelling open to the public) has been allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.
(2) The relief is withdrawn if at any time in the period of three years beginning with the effective date of the first transaction (“the control period”) the requirement in sub-paragraph (3) is not met.
(3) The requirement is that the dwelling is being exploited as a source of income in the course of a qualifying trade.
(4) The requirement in sub-paragraph (3) does not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect the interest in question to be exploited as mentioned in that sub-paragraph.
(5) Sub-paragraph (6) applies if at some time in the control period that person—
(a) has not begun to exploit the interest as a source of income in the course of a relevant trade, or
(b) has ceased so to exploit it.
(6) The requirement in sub-paragraph (3) is treated as being met if reasonable steps are being taken to ensure that the relevant interest begins to be exploited as mentioned in that sub-paragraph, or that such exploitation of the interest is resumed.
(7) In this paragraph—
(a) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1), 72A(1) or 73(1);
(b) references to a major interest in land include an undivided share in a major interest in land.
6G (1) This paragraph applies where relief under paragraph 5D (dwellings for occupation by certain employees etc) has been allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.
(2) The relief is withdrawn if at any time in the control period when the relevant person holds a relevant interest (whether jointly, or in common, or otherwise) any requirement in sub-paragraph (4) is not met.
(3) In sub-paragraph (2) “the control period” means the three years beginning with the effective date of the first transaction.
(4) The requirements are that—
(a) the relevant person, or a relevant group member, carries on a relievable business,
(b) the dwelling is made available as mentioned in paragraph 5D(2)(a), and
(c) the dwelling is made so available for purposes that are solely or mainly purposes of the relievable business mentioned in sub-paragraph (a).
(5) The requirements in sub-paragraph (4) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect those requirements to be met.
(6) Sub-paragraph (7) applies if at some time in the control period the relevant interest—
(a) has not begun to be made available as mentioned in sub-paragraph (4)(b) and (c), or
(b) has ceased to be so made available.
(7) The requirements in paragraphs (b) and (c) of sub-paragraph (4) are treated as being met if reasonable steps are being taken to ensure that the dwelling will begin to be, or will return to being, made available as mentioned in those paragraphs.
(8) Where the relevant person is a company, “relevant group member” means a company which is a member of the same group of companies as the relevant person for the purposes mentioned in paragraph 1(2) of Schedule 7.
(9) In this paragraph—
(a) “relevant interest” has the same meaning as in paragraph 6D;
(b) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1), 72A(1) or 73(1);
(c) references to a major interest in land include an undivided share in a major interest in land.
6H (1) This paragraph applies where relief under paragraph 5F (farmhouses) has been allowed, in accordance with paragraph 6A(4) or 6B(3), in relation to the purchase of a major interest in land.
(2) The relief is withdrawn if at any time in the control period when the relevant person holds a relevant interest (whether jointly, or in common, or otherwise) any requirement in sub-paragraph (4) is not met.
(3) In sub-paragraph (2) “the control period” means the three years beginning with the effective date of the first transaction.
(4) The requirements are that—
(a) the land mentioned in paragraph 5F(2) is occupied for the purposes of a qualifying trade of farming, and
(b) the dwelling is occupied for the purposes of that trade by a qualifying farm worker.
(5) The requirements in sub-paragraph (4) do not apply in relation to times when, because of a change of circumstances that is unforeseen and beyond the relevant person's control, it is not reasonable to expect those requirements to be met.
(6) Sub-paragraph (7) applies if at some time in the control period a requirement in sub-paragraph (4)—
(a) has not begun to be met, or
(b) has ceased to be met.
(7) The requirement is treated as being met if reasonable steps are being taken to ensure that the requirement begins to be met, or is again met.
(8) In this paragraph—
(a) “the relevant interest” has the same meaning as in paragraph 6D;
(b) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1), 72A(1) or 73(1);
(c) references to a major interest in land include an undivided share in a major interest in land.
6I (1) This paragraph applies where relief under paragraph 5FA (qualifying housing co-operatives) has been allowed, in accordance with paragraph 6A(4), in relation to the purchase of a major interest in land.
(2) The relief is withdrawn (subject to sub-paragraph (3)) if—
(a) on any day in the period of three years beginning with the effective date of the first transaction (“the control period”), the relevant person is not a qualifying housing body, and
(b) immediately before the first day on which that is the case the relevant person holds a relevant interest (whether jointly, or in common, or otherwise).
(3) If, on any day in the control period, the relevant person is not a qualifying housing body because it ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless—
(a) another person (“the first successor”) has succeeded to the engagements of the relevant person, and
(b) condition A or condition B is met (and if condition B is met, subject to sub-paragraph (6)).
(4) Condition A is that, on the day the first successor succeeds to the engagements of the relevant person (“the day of succession”), the first successor is not a qualifying housing body.
(5) Condition B is that—
(a) on any day in the part of the control period that falls after the day of succession, the first successor is not a qualifying housing body, and
(b) immediately before the first day on which that is the case the first successor still holds a relevant interest (whether jointly, or in common, or otherwise).
(6) If condition B is met because the first successor ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless it would have been withdrawn by virtue of sub-paragraph (3) if references in sub-paragraphs (3) to (5)—
(a) to the relevant person were references to the first successor, and
(b) to the first successor were references to the person who has succeeded to the engagements of the first successor (“the second successor”).
(7) Sub-paragraph (6) is to apply to the second successor as it applies to the first successor, and so on, subject to the necessary modifications.
(8) In this paragraph—
(a) “qualifying housing body” means—
(i) a company that is a qualifying housing co-operative for the purposes of section 150(3A) of the Finance Act 2013 (relief from ATED),
(ii) a registered provider of social housing, or
(iii) a registered social landlord;
(b) “relevant interest” has the same meaning as in paragraph 6D;
(c) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1) or 73(1);
(d) references to a major interest include an undivided share in a major interest in land.
Meaning of “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
(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.
(4) Land that subsists, or is to subsist, for the benefit of a dwelling is taken to be part of the dwelling.
(5) The subject-matter of a transaction is also taken to include an interest in a dwelling if—
(a) substantial performance of a contract constitutes the 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 use as a single dwelling, and
(c) construction or adaptation of the building, or part of the building, has not begun by the time the contract is substantially performed.
(6) In sub-paragraph (5)—
“contract” includes any agreement;
“relevant deeming provision” means any of sections 44 to 45A, paragraph 5(1) or (2) of Schedule 2A or paragraph 12A or 19(3) of Schedule 17A.
(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).
(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.
8 (1) The Treasury may by order amend paragraph 7 so as to specify cases where use of a building is to be use of a building as a dwelling for the purposes of sub-paragraph (2) or (5) of that paragraph.
(2) The reference in section 116(8)(a) (power to amend section 116(2) and (3)) to “the purposes of subsection (1)” includes a reference to the purposes of paragraph 7(2) and (5).
Interpretation
9 In this Schedule—
“appurtenant rights”, in relation to a chargeable interest that is, or is part of, the subject-matter of a transaction, means any rights or interests appurtenant or pertaining to the chargeable interest that are acquired with it;
“attributable” means attributable on a just and reasonable basis;
“collective investment scheme” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 235 of that Act);
“company” means a body corporate other than a partnership.
“financial institution” is to be read in accordance with subsections (1) and (2) of section 73BA and, in paragraphs 6A to 6I, also in accordance with subsection (3) of that section;
“property development trade ” has the meaning given by paragraph 5(3);
“ property rental business” has the meaning given by section 133(4) of the Finance Act 2013;
“property trading business attributable” has the meaning given by paragraph 5(3);
“qualifying farm worker” has the meaning given by paragraph 5F(4);
“qualifying trade” has the meaning given by paragraph 5B(3);
“qualifying trade of farming” has the meaning given by paragraph 5F(5);
“relievable business” has the meaning given by paragraph 5D(4).
SCHEDULE 5 Stamp duty land tax: amount of tax chargeable: rent
Section 56
Introduction
1 This Schedule provides for calculating the tax chargeable—
(a) in respect of a chargeable transaction for which the chargeable consideration consists of or includes rent, or
(b) where such a transaction is to be taken into account as a linked transaction.
Amounts payable in respect of periods before grant of lease
1A For the purposes of this Part “rent” does not include any chargeable consideration for the grant of a lease that is payable in respect of a period before the grant of the lease.
Calculation of tax chargeable in respect of rent
2 (1) Tax is chargeable under this Schedule in respect of so much of the chargeable consideration as consists of rent.
(2) The tax chargeable is the total of the amounts produced by taking the relevant percentage of so much of the relevant rental value as falls within each rate band.
(3) The relevant percentages and rate bands are determined by reference to whether the relevant land—
(a) consists entirely of residential property (in which case Table A below applies), or
(b) consists of or includes land that is not residential property (in which case Table B below applies).
TABLE A: RESIDENTIAL
Rate bands | Percentage
£0 to £125,000 | 0%
Over £125,000 | 1%
TABLE B: NON-RESIDENTIAL OR MIXED
Rate bands | Percentage
£0 to £150,000 | 0%
Over £150,000 but not over £5 million | 1%
Over £5 million | 2%
(4) For the purposes of sub-paragraphs (2) and (3)—
(a) the relevant rental value is the net present value of the rent payable over the term of the lease, and
(b) the relevant land is the land that is the subject of the lease.
(5) If the lease in question is one of a number of linked transactions for which the chargeable consideration consists of or includes rent, the above provisions are modified.
(6) In that case the tax chargeable is determined as follows.
First, calculate the amount of the tax that would be chargeable if the linked transactions were a single transaction, so that—
the relevant rental value is the total of the net present values of the rent payable over the terms of all the leases, and
the relevant land is all land that is the subject of any of those leases.
Then, multiply that amount by the fraction:
NPVTNPV
where—
NPV is the net present value of the rent payable over the term of the lease in question, and
TNPV is the total of the net present values of the rent payable over the terms of the all the leases.
Net present value of rent payable over term of lease
3 The net present value (v) of the rent payable over the term of a lease is calculated by applying the formula:
where—
ri is the rent payable ... in respect of year i,
i is the first, second, third, etc year of the term,
n is the term of the lease ..., and
T is the temporal discount rate (see paragraph 8).
Rent payable
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of provision for rent review
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term of lease
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treatment of lease for indefinite term
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Temporal discount rate
8 (1) For the purposes of this Schedule the “temporal discount rate” is 3.5% or such other rate as may be specified by regulations made by the Treasury.
(2) Regulations under this paragraph may make any such provision as is mentioned in subsection (3)(b) to (f) of section 178 of the Finance Act 1989 (c. 26) (power of Treasury to set rates of interest).
(3) Subsection (5) of that section (power of Inland Revenue to specify rate by order in certain circumstances) applies in relation to regulations under this paragraph as it applies in relation to regulations under that section.
Tax chargeable in respect of consideration other than rent : general
9 (1) Where in the case of a transaction to which this Schedule applies there is chargeable consideration other than rent, the provisions of this Part apply in relation to that consideration as in relation to other chargeable consideration ....
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Tax chargeable under this Schedule is in addition to any tax chargeable under section 55 or 74(1A) or Schedule 4A ... in respect of consideration other than rent.
(5) Where a transaction to which this Schedule applies falls to be taken into account for the purposes of section 55 ... as a linked transaction, no account shall be taken of rent in determining the relevant consideration.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase of rent treated as grant of new lease
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interpretation
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART 1 Eligibility for relief
Eligibility for relief
1 (1) Relief may be claimed for a chargeable transaction if the following conditions are met (but this is subject to sub-paragraph (7)).
(2) The first condition is that the main subject-matter of the transaction consists of a major interest in a single dwelling (“the purchased dwelling”).
(3) The second condition is that the relevant consideration for the transaction (other than any consisting of rent) is not more than £500,000.
(4) The third condition is that the purchaser, or (if more than one) each of the purchasers, is a first-time buyer who intends to occupy the purchased dwelling as the purchaser's only or main residence.
(5) The fourth condition is that—
(a) the transaction is not linked to another land transaction, or
(b) the transaction is linked only to land transactions that are within sub-paragraph (6).
(6) A land transaction is within this sub-paragraph if the main subject-matter of the transaction consists of—
(a) an interest in land that is or forms part of the garden or grounds of the purchased dwelling, or
(b) an interest in or right over land that subsists for the benefit of—
(i) the purchased dwelling, or
(ii) land that is or forms part of the garden or grounds of the purchased dwelling.
(7) Relief may not be claimed under this paragraph for a chargeable transaction if it is a higher rates transaction for the purposes of paragraph 1 of Schedule 4ZA.
Eligibility for relief: linked transactions within paragraph 1(6)
2 (1) Where a land transaction (“the main transaction”) is eligible for relief under paragraph 1 (or would be if it were a chargeable transaction), relief may also be claimed for any chargeable transaction that is linked to the main transaction.
(2) But relief may not be claimed under this paragraph for a chargeable transaction if the purchaser, or (if more than one) any of the purchasers in relation to the transaction is not a purchaser in relation to the main transaction.
Eligibility for relief: alternative finance arrangements
3 (1) This paragraph applies in relation to a land transaction which is the first transaction under an alternative finance arrangement entered into between a person and a financial institution.
(2) The person (rather than the institution) is to be treated as the purchaser in relation to the transaction for the purposes of paragraphs 1(4) and 2(2).
(3) In this paragraph—
“alternative finance arrangement” means an arrangement of a kind mentioned in section 71A(1) or 73(1),
“financial institution” has the meaning it has in those sections (see section 73BA), and
“first transaction”, in relation to an alternative finance arrangement, has the meaning given by section 71A(1)(a) or (as the case may be) section 73(1)(a)(i).
Eligibility for relief: acquisition of new lease on bare trust
3A In determining who is the purchaser for the purposes of paragraphs 1(4) and 2(2), paragraph 3 of Schedule 16 is to have effect as if sub-paragraphs (2) and (3) (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) were omitted.
PART 2 The Relief
The relief
4 If relief is claimed under paragraph 1 or 2 for a chargeable transaction, the amount of tax chargeable in respect of the transaction is to be determined as if in section 55(1B) (amount of tax chargeable: general) for Table A there were substituted—
Table A: Residential
Relevant consideration | Percentage
So much as does not exceed £300,000 | 0%
Any remainder (so far as not exceeding £500,000) | 5%
Withdrawal of relief
5 (1) This paragraph applies if—
(a) relief is claimed under paragraph 1 or 2 for a chargeable transaction (“the first transaction”), and
(b) the effect of another land transaction (“the later transaction”) that is linked to the first transaction is that the first transaction ceases to be a transaction for which relief may be claimed under that paragraph.
(2) Tax or (as the case may be) additional tax is chargeable on the first transaction as if the claim had not been made.
PART 3 Interpretation
“First-time buyer”
6 (1) In this Schedule “first-time buyer” means an individual who—
(a) has not previously been a purchaser in relation to a land transaction the main subject-matter of which was a major interest in a dwelling,
(b) has not previously acquired —
(i) an equivalent interest in a dwelling situated in a country or territory outside England, Wales and Northern Ireland, or
(ii) an interest of a kind mentioned in section 117(2) in a dwelling situated in Wales,
(c) has not previously been, or been one of the persons who was, “the person” for the purposes of section 71A or 73 in a case where the main subject-matter of the first transaction within the meaning of the section concerned was a major interest in a dwelling, and
(d) would not have been such a person for those purposes in such a case if the provisions mentioned in paragraph (c) had been in force, and had had effect in the country or territory concerned at all material times (subject, where required, to appropriate modifications).
(2) For the purposes of sub-paragraph (1)(b) and (d), ignore a lease or, in the case of a dwelling situated in Wales, a term of years absolute which has less than 21 years to run at the beginning of the day after the date on which it is acquired.
(3) In determining any question for the purposes of sub-paragraph (1), paragraph 3 of Schedule 16 is to have effect as if sub-paragraphs (2) and (3) (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) were omitted.
“Relevant consideration”
7 In this Schedule “relevant consideration” means—
(a) in the case of a transaction that is not one of a number of linked transactions, the chargeable consideration for the transaction, and
(b) in the case of a transaction that is one of a number of linked transactions, the total of the chargeable consideration for all those transactions.
“Major interest”
8 The main subject-matter of a transaction is not a major interest for the purposes of this Schedule if it is a term of years absolute which has less than 21 years to run at the beginning of the day after the effective date of the transaction.
What counts as a dwelling
9 (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
(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 that land) is taken to be part of that dwelling.
(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 a major interest in a dwelling if—
(a) substantial performance of a contract constitutes the effective date of that transaction by virtue of a relevant deeming provision,
(b) the main subject-matter of the transaction consists of a major interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a single dwelling, and
(c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed.
(6) In sub-paragraph (5)—
“contract” includes any agreement,
“relevant deeming provision” means any of sections 44 to 45A or paragraph 5(1) or (2) of Schedule 2A or paragraph 12 of Schedule 17A, and
“substantially performed” has the same meaning as in section 44.
(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraphs (2) or (5).
(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.
SCHEDULE 6A Relief for certain acquisitions of residential property
Section 58A
Acquisition by house-building company from individual acquiring new dwelling
1 (1) Where a dwelling (“the old dwelling”) is acquired by a house-building company from an individual (whether alone or with other individuals), the acquisition is exempt from charge if the following conditions are met.
(2) The conditions are—
(a) that the individual (whether alone or with other individuals) acquires from the house-building company a new dwelling,
(b) that the individual—
(i) occupied the old dwelling as his only or main residence at some time in the period of two years ending with the date of its acquisition, and
(ii) intends to occupy the new dwelling as his only or main residence,
(c) that each acquisition is entered into in consideration of the other, and
(d) that the area of land acquired by the house-building company does not exceed the permitted area.
(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired by the house-building company exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.
(4) A “house-building company” means a company that carries on the business of constructing or adapting buildings or parts of buildings for use as dwellings.
References in this paragraph to such a company include any company connected with it.
(5) In this paragraph—
(a) references to the acquisition of the new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling;
(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and
(c) references to the market value of the old dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.
Acquisition by property trader from individual acquiring new dwelling
2 (1) Where a dwelling (“the old dwelling”) is acquired by a property trader from an individual (whether alone or with other individuals), the acquisition is exempt from charge if the following conditions are met.
(2) The conditions are—
(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals who acquire new dwellings from house-building companies,
(b) that the individual (whether alone or with other individuals) acquires a new dwelling from a house-building company,
(c) that the individual—
(i) occupied the old dwelling as his only or main residence at some time in the period of two years ending with the date of its acquisition, and
(ii) intends to occupy the new dwelling as his only or main residence,
(d) that the property trader does not intend—
(i) to spend more than the permitted amount on refurbishment of the old dwelling, or
(ii) to grant a lease or licence of the old dwelling, or
(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and
(e) that the area of land acquired by the property trader does not exceed the permitted area.
Paragraph (d)(ii) does not apply to the grant of lease or licence to the individual for a period of no more than six months.
(3) Where the conditions in sub-paragraph (2)(a) to (d) are met, but the area of land acquired by the property trader exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.
(4) The provisions of paragraph 1(4) (meaning of “house-building company” etc) also have effect for the purposes of this paragraph.
(5) In this paragraph—
(a) references to the acquisition of a new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling;
(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and
(c) references to the market value of the old dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.
Acquisition by property trader from personal representatives
3 (1) Where a dwelling is acquired by a property trader from the personal representatives of a deceased individual, the acquisition is exempt from charge if the following conditions are met.
(2) The conditions are—
(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from personal representatives of deceased individuals,
(b) that the deceased individual occupied the dwelling as his only or main residence at some time in the period of two years ending with the date of his death,
(c) that the property trader does not intend—
(i) to spend more than the permitted amount on refurbishment of the dwelling, or
(ii) to grant a lease or licence of the dwelling, or
(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and
(d) that the area of land acquired does not exceed the permitted area.
(3) Where the conditions in sub-paragraph (2)(a) to (c) are met, but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.
(4) In this paragraph—
(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and
(b) references to the market value of the dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.
Acquisition by property trader from individual where chain of transactions breaks down
4 (1) Where a dwelling (“the old dwelling”) is acquired by a property trader from an individual (whether alone or with other individuals), the acquisition is exempt from charge if—
(a) the individual has made arrangements to sell a dwelling (“the old dwelling”) and acquire another dwelling (“the second dwelling”),
(b) the arrangements to sell the old dwelling fail, and
(c) the acquisition of the old dwelling is made for the purpose of enabling the individual’s acquisition of the second dwelling to proceed,
and the following conditions are met.
(2) The conditions are—
(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in those circumstances,
(b) that the individual—
(i) occupied the old dwelling as his only or main residence at some time in the period of two years ending with the date of its acquisition, and
(ii) intends to occupy the second dwelling as his only or main residence,
(c) that the property trader does not intend—
(i) to spend more than the permitted amount on refurbishment of the old dwelling, or
(ii) to grant a lease or licence of the old dwelling, or
(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and
(d) that the area of land acquired does not exceed the permitted area.
Paragraph (c)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than six months.
(3) Where the conditions in sub-paragraph (2)(a) to (c) are met, but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.
(4) In this paragraph—
(a) references to the acquisition of the second dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling;
(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and
(c) references to the market value of the old dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.
Acquisition by employer in case of relocation of employment
5 (1) Where a dwelling is acquired from an individual (whether alone or with other individuals) by his employer, the acquisition is exempt from charge if the following conditions are met.
(2) The conditions are—
(a) that the individual occupied the dwelling as his only or main residence at some time in the period of two years ending with the date of the acquisition,
(b) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,
(c) that the consideration for the acquisition does not exceed the market value of the dwelling, and
(d) that the area of land acquired does not exceed the permitted area.
(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.
(4) In this paragraph “relocation of employment” means a change of the individual’s place of employment due to—
(a) his becoming an employee of the employer,
(b) an alteration of the duties of his employment with the employer, or
(c) an alteration of the place where he normally performs those duties.
(5) For the purposes of this paragraph a change of residence is one “resulting from” relocation of employment if—
(a) the change is made wholly or mainly to allow the individual to have his residence within a reasonable daily travelling distance of his new place of employment, and
(b) his former residence is not within a reasonable daily travelling distance of that place.
The individual’s “new place of employment” means the place where he normally performs, or is normally to perform, the duties of his employment after the relocation.
(6) In this paragraph—
(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling;
(b) references to the market value of the dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area; and
(c) references to an individual’s employer include a prospective employer.
Acquisition by property trader in case of relocation of employment
6 (1) Where a dwelling is acquired by a property trader from an individual (whether alone or with other individuals), the acquisition is exempt from charge if the following conditions are met.
(2) The conditions are—
(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in connection with a change of residence resulting from relocation of employment,
(b) that the individual occupied the dwelling as his only or main residence at some time in the period of two years ending with the date of the acquisition,
(c) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,
(d) that the consideration for the acquisition does not exceed the market value of the dwelling,
(e) that the property trader does not intend—
(i) to spend more than the permitted amount on refurbishment of the dwelling, or
(ii) to grant a lease or licence of the dwelling, or
(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and
(f) that the area of land acquired does not exceed the permitted area.
Paragraph (e)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than six months.
(3) Where the conditions in sub-paragraph (2)(a) to (e) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.
(4) In this paragraph “relocation of employment” means a change of the individual’s place of employment due to—
(a) his becoming employed by a new employer,
(b) an alteration of the duties of his employment, or
(c) an alteration of the place where he normally performs those duties.
(5) For the purposes of this paragraph a change of residence is one “resulting from” relocation of employment if—
(a) the change is made wholly or mainly to allow the individual to have his residence within a reasonable daily travelling distance of his new place of employment, and
(b) his former residence is not within a reasonable daily travelling distance of that place.
An individual’s “new place of employment” means the place where he normally performs, or is normally to perform, the duties of his employment after the relocation.
(6) In this paragraph—
(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and
(b) references to the market value of the dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.
Meaning of “dwelling”, “new dwelling” and “the permitted area”
7 (1) “Dwelling” includes land occupied and enjoyed with the dwelling as its garden or grounds.
(2) A building or part of a building is a “new dwelling”if—
(a) it has been constructed for use as a single dwelling and has not previously been occupied, or
(b) it has been adapted for use as a single dwelling and has not been occupied since its adaptation.
(3) “The permitted area”, in relation to a dwelling, means land occupied and enjoyed with the dwelling as its garden or grounds that does not exceed—
(a) an area (inclusive of the site of the dwelling) of 0.5 of a hectare, or
(b) such larger area as is required for the reasonable enjoyment of the dwelling as a dwelling having regard to its size and character.
(4) Where sub-paragraph (3)(b) applies, the permitted area is taken to consist of that part of the land that would be the most suitable for occupation and enjoyment with the dwelling as its garden or grounds if the rest of the land were separately occupied.
Meaning of “property trader” and “principal”
8 (1) A “property trader” means—
(a) a company,
(b) a limited liability partnership, or
(c) a partnership whose members are all either companies or limited liability partnerships,
that carries on the business of buying and selling dwellings.
(2) In relation to a property trader a “principal” means—
(a) in the case of a company, a director;
(b) in the case of a limited liability partnership, a member;
(c) in the case of a partnership whose members are all either companies or limited liability partnerships, a member or a person who is a principal of a member.
(3) For the purposes of this Schedule—
(a) anything done by or in relation to a company connected with a property trader is treated as done by or in relation to that property trader, and
(b) references to the principals or employees of a property trader include the principals or employees of any such company.
Meaning of “refurbishment” and “the permitted amount”
9 (1) “Refurbishment”of a dwelling means the carrying out of works that enhance or are intended to enhance the value of the dwelling, but does not include—
(a) cleaning the dwelling, or
(b) works required solely for the purpose of ensuring that the dwelling meets minimum safety standards.
(2) The “permitted amount”, in relation to the refurbishment of a dwelling, is—
(a) 10,000, or
(b) 5% of the consideration for the acquisition of the dwelling,
whichever is the greater, but subject to a maximum of £20,000.
Connected companies etc
10 Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this Schedule.
Withdrawal of relief under this Schedule
11 (1) Relief under this Schedule is withdrawn in the following circumstances.
(2) Relief under paragraph 2 (acquisition by property trader from individual acquiring new dwelling) is withdrawn if the property trader—
(a) spends more than the permitted amount on refurbishment of the old dwelling, or
(b) grants a lease or licence of the old dwelling, or
(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling.
Paragraph (b) does not apply to the grant of lease or licence to the individual for a period of no more than six months.
(3) Relief under paragraph 3 (acquisition by property trader from personal representatives) is withdrawn if the property trader—
(a) spends more than the permitted amount on refurbishment of the dwelling, or
(b) grants a lease or licence of the dwelling, or
(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling.
(4) Relief under paragraph 4 (acquisition by property trader from individual where chain of transactions breaks down) is withdrawn if the property trader—
(a) spends more than the permitted amount on refurbishment of the old dwelling, or
(b) grants a lease or licence of the old dwelling, or
(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling.
Paragraph (b) does not apply to the grant of lease or licence to the individual for a period of no more than six months.
(5) Relief under paragraph 6 (acquisition by property trader in case of relocation of employment) is withdrawn if the property trader—
(a) spends more than the permitted amount on refurbishment of the dwelling, or
(b) grants a lease or licence of the dwelling, or
(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling.
Paragraph (b) does not apply to the grant of lease or licence to the individual for a period of no more than six months.
(6) Where relief is withdrawn the amount of tax chargeable is the amount that would have been chargeable in respect of the acquisition but for the relief.
Section 58D
Introduction
1 This Schedule is arranged as follows—
(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,
(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
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—
(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
(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—
(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, ...
(aa) paragraph 3 of Schedule 4A applies to it, or
(b) relief under Schedule 7, Schedule 7A 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.
(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.
(7) Sub-paragraph (6) does not apply where—
(a) the vendor is a qualifying body within the meaning of paragraph 5 of Schedule 9,
(b) the transaction is a sale under a sale and leaseback arrangement within the meaning of section 57A(2),
(c) that sale is the grant of a leasehold interest, and
(d) the leaseback element of that arrangement is exempt from charge under section 57A.
Key terms
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
(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—
(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
4 (1) If relief under this Schedule is claimed for a relevant transaction, the amount of tax chargeable in respect of the transaction is the sum of—
(a) the tax related to the consideration attributable to dwellings (see paragraph 5(1) and (2)), and
(b) the tax related to the remaining consideration (if any) (see paragraph 5(7)).
(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 chargeable consideration for the transaction as is attributable to the dwellings in total.
(3) “The remaining consideration” is the chargeable consideration for the transaction less the consideration attributable to dwellings.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) If the whole or part of the chargeable consideration for a relevant transaction is rent, sub-paragraph (1) has effect subject to section 56 and Schedule 5.
(6) “Attributable” means attributable on a just and reasonable basis.
The amount of tax chargeable
5 (1) For the purposes of paragraph 4(1)(a), “the tax related to the consideration attributable to dwellings” is determined as follows—
Step 1 Determine the amount of tax that would be chargeable under section 55 on the assumption that—
the relevant land consisted entirely of residential property, and
the relevant consideration were the fraction produced by dividing total dwellings consideration by total dwellings.
Step 2 Multiply the amount determined at Step 1 by total dwellings.
Step 3 If the relevant transaction is one of a number of linked transactions, go to Step 4. Otherwise, the amount found at Step 2 is the tax related to the consideration attributable to dwellings.
Step 4 Multiply the amount found at Step 2 by—
CD TDC
where—
“CD” is the consideration attributable to dwellings for the relevant transaction, and
“TDC” is total dwellings consideration.
(2) But if the amount found at Step 2 of sub-paragraph (1) is less than 1% of total dwellings consideration, for the purposes of paragraph 4(1)(a) “the tax related to the consideration attributable to dwellings” is an amount equal to 1% of the consideration attributable to dwellings.
(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 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 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 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.
(6A) In the application of sub-paragraph (1), account is to be taken of paragraph 1 of Schedule 4ZA if the relevant transaction is a higher rates transaction for the purposes of that paragraph.
(7) For the purposes of paragraph 4(1)(b), “the tax related to the remaining consideration” is the appropriate fraction of the amount of tax which (but for this Schedule) would be due in respect of the relevant transaction.
(8) In subsection (7) “the appropriate fraction” means—
RC TDC + TRC
where—
“RC” is the remaining consideration for the relevant transaction,
“TDC” is total dwellings consideration, and
“TRC” is total remaining consideration.
(9) For a transaction that is not one of a number of linked transactions, “total remaining consideration” is the remaining consideration for that transaction (see paragraph 4(3)).
(10) For one of a number of linked transactions, “total remaining consideration” is—
(a) the total of the chargeable consideration for all those transactions, less
(b) total dwellings consideration.
Adjustment for change of circumstances
6 (1) This paragraph applies if—
(a) relief under this Schedule is claimed for a relevant transaction,
(b) an event occurs in the relevant period, and
(c) had the event occurred immediately before the effective date of the transaction, more tax (calculated according to the effective date of the transaction) would have been payable, whether because the transaction would not have been a relevant transaction or otherwise.
(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.
(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 chargeable in respect of the transaction on the basis of the information contained in the return,
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and
(d) the additional tax payable must be paid not later than the 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.
(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 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 transaction were to the date on which the contract was substantially performed.
(7) In this paragraph—
“completion” has the same meaning as in section 44;
“contract” includes any agreement (including, in the case of Scotland, missives of let not constituting a lease);
“event” includes any change of circumstance or change of plan;
“substantially performed” has the same meaning as in section 44.
(8) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this paragraph.
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
(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.
(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 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 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)—
“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 5(1) or (2) of Schedule 2A or paragraph 12A or 19(3) of Schedule 17A;
“substantially performed” has the same meaning as in section 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.
SCHEDULE 6C Stamp duty land tax: relief for special tax sites
Section 61A
PART 1 qualifying land
Transaction land
1 In this Schedule, “transaction land”, in relation to a land transaction, means land a chargeable interest in which is the subject matter of the transaction.
Qualifying land
2 For the purposes of this Schedule, transaction land is “qualifying land” if, on the effective date of the transaction—
(a) it is situated in a special tax site, and
(b) the purchaser intends it to be used exclusively in a qualifying manner.
Use of land in a qualifying manner
3 (1) For the purposes of this Schedule, transaction land is used in a qualifying manner if—
(a) it is used by the purchaser or a connected person in the course of a commercial trade or profession,
(b) it is developed or redeveloped by the purchaser or a connected person for use (by any person) in the course of a commercial trade or profession,
(c) it is exploited by the purchaser or a connected person, in the course of a commercial trade or profession, as a source of rents or other receipts (other than excluded rents), or
(d) it is used in two or more of the ways described in paragraphs (a) to (c).
(2) But land is not used in a qualifying manner to the extent that it is—
(a) used as a dwelling or as the garden or grounds of a dwelling,
(b) developed or redeveloped to become residential property,
(c) exploited as a source of rents or other receipts payable by a person using the land as a dwelling or as the garden or grounds of a dwelling, or
(d) held (as stock of the business) for resale without development or redevelopment.
(3) For the purposes of this paragraph, use of land in the course of a commercial trade or profession includes use of land for a purpose that is ancillary to the use of other land which—
(a) is situated in a special tax site, and
(b) is being used, or developed or redeveloped, in the course of a commercial trade or profession.
(4) The references in sub-paragraph (2) to land used as the garden or grounds of a dwelling include a building or structure on the land.
(5) The references in this paragraph to doing something in the course of a commercial trade or profession include doing something in the course of a property rental business.
(6) In this paragraph—
“commercial”, in relation to a trade or profession, means carried on—
on a commercial basis, and
with a view to profit;
“excluded rents” has the same meaning as in section 133 of the Finance Act 2013;
“property rental business” means a property business as defined in Chapter 2 of Part 3 of the Income Tax (Trading and Other Income) Act 2005.
Connected persons
4 (1) In this Schedule, “connected person” means a person who is connected with the purchaser.
(2) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this paragraph.
PART 2 The relief
Exemption
5 (1) This paragraph applies to a land transaction if at least 90% of the chargeable consideration for the transaction is attributable to qualifying land.
(2) The transaction is exempt from charge.
Other relief
6 (1) This paragraph applies to a land transaction if the proportion of the chargeable consideration for the transaction that is attributable to qualifying land (“the relevant proportion”) is less than 90% but at least 10%.
(2) The tax chargeable in respect of the transaction is reduced by the relevant proportion.
Attributing chargeable consideration to land
7 (1) For the purposes of this Schedule, the consideration attributable to qualifying land must be determined on a just and reasonable basis.
(2) Sub-paragraphs (3) and (4) apply if less than 100% of the chargeable consideration attributable to transaction land situated in a special tax site (“the relevant consideration”) is attributable to land that satisfies the condition in paragraph 2(b).
(3) If at least 90% of the freeport consideration is attributable to land that satisfies the condition in paragraph 2(b) then, for the purposes of this Schedule, all of the relevant consideration is to be treated as being attributable to qualifying land.
(4) If less than 10% of the relevant consideration is attributable to land that satisfies the condition in paragraph 2(b) then, for the purposes of this Schedule, all of the freeport consideration is to be treated as not being attributable to qualifying land.
PART 3 Withdrawal of relief
Withdrawal of relief
8 (1) This paragraph applies where relief under Part 2 of this Schedule has been allowed in respect of a land transaction.
(2) The relief is withdrawn if, at any time during the control period, the qualifying land is not used exclusively in a qualifying manner.
(3) But the relief is not withdrawn where, because of a change in circumstances that is unforeseen and beyond the purchaser’s control, it is not reasonable to expect the qualifying land to be used exclusively in a qualifying manner at that time.
(4) Where, at a time during the control period, the use of all or part of the qualifying land in a qualifying manner has not yet begun, that land, or that part of the land, is to be treated as being used exclusively in a qualifying manner if reasonable steps are being taken to ensure that it is used in that manner.
(5) Where, at a time during the control period, the use of all or part of the qualifying land in a qualifying manner has ceased, that land, or that part of the land, is to be treated as being used exclusively in a qualifying manner if reasonable steps are being taken—
(a) to ensure that it is used in that manner, or
(b) to dispose of all chargeable interests in that land, or that part of the land, that are held by the purchaser and connected persons in a timely manner.
The control period
9 (1) In this Schedule, “the control period”, in relation to a land transaction, means the shorter of—
(a) the period of three years beginning with the effective date of that transaction, and
(b) the period beginning with the effective date of that transaction and ending with the effective date of the final transaction.
(2) For the purposes of this paragraph, a land transaction is “the final transaction” if, immediately after the effective date of the transaction, neither the purchaser nor a connected person holds a chargeable interest in the qualifying land (whether as a result of that transaction alone or as a result of that transaction and other land transactions).
Disposal of interest in part of qualifying land during control period
10 (1) This paragraph applies where the purchaser ceases to hold a chargeable interest in part of the qualifying land during the control period.
(2) The references in paragraphs 8 and 9 to the qualifying land are to be treated as references only to the part of the qualifying land in relation to which the purchaser still holds a chargeable interest (whether the chargeable interest acquired in the land transaction in respect of which relief was allowed under Part 2 of this Schedule or another chargeable interest).
PART 4 Alternative finance arrangements
Cases involving alternative finance arrangements
11 (1) This paragraph applies where either of the following applies—
(a) section 71A (land sold to financial institution and leased to person), or
(b) section 73 (land sold to financial institution and re-sold to person).
(2) This paragraph applies for the purposes of determining—
(a) whether relief is available under Part 2 of this Schedule for the first transaction, and
(b) whether relief allowed for the first transaction is withdrawn under Part 3 of this Schedule.
(3) For those purposes this Schedule has effect as if—
(a) references to the purchaser were references to the relevant person, and
(b) the reference in paragraph 3(2)(d) to land held (as stock of the business) for resale without development or redevelopment were a reference to land held in that manner by the relevant person.
(4) The first transaction does not qualify for relief under Part 2 of this Schedule except where it does so by virtue of this paragraph.
(5) In this paragraph—
“the first transaction” has the same meaning as in section 71A or 73 (as appropriate);
“the relevant person” means the person, other than the financial institution, who entered into the arrangements mentioned in section 71A(1) or 73(1) (as appropriate).
PART 5 Power to change when relief is available
Power to change the cases in which relief is available
12 (1) The Treasury may by regulations—
(a) amend the meaning of “qualifying land”, or
(b) make other provision about the availability of relief under this Schedule, including provision—
(i) adding, removing or altering, or otherwise about, conditions that must be met in order for relief to be available,
(ii) about the withdrawal of relief, or
(iii) about returns where relief is withdrawn.
(2) Regulations under this paragraph may not remove the requirement for land to be situated in a special tax site.
(3) Regulations under this paragraph may, among other things—
(a) make provision by reference to the land, the land transaction, the purchaser or connected persons;
(b) impose conditions relating to accounts or other records;
(c) impose other conditions requiring a person to take steps specified in the regulations.
(4) Regulations under this paragraph—
(a) may amend, repeal or otherwise modify provisions of this Schedule, and
(b) where made in reliance on sub-paragraph (1)(b) of this paragraph or on section 114(6)(c), may amend, repeal or otherwise modify other provisions of this Act.
(5) The power to make regulations under this paragraph may be exercised only in relation to transactions with an effective date that is on or after the date on which the regulations come into force.
Approval of regulations
13 (1) An instrument containing regulations under paragraph 12 must be laid before the House of Commons after being made.
(2) If the regulations are not approved by the House of Commons before the end of the period of 28 days beginning with the day on which they are made, they cease to have effect at the end of that period (if they have not already ceased to have effect under sub-paragraph (3)).
(3) If, on any day during that period of 28 days, the House of Commons, in proceedings on a motion that (or to the effect that) the regulations be approved, comes to a decision rejecting the regulations, they shall cease to have effect at the end of that day.
(4) In reckoning any such period of 28 days, no account is to be taken of any time during which—
(a) Parliament is prorogued or dissolved, or
(b) the House of Commons is adjourned for more than four days.
(5) Where regulations cease to have effect under sub-paragraph (3), their ceasing to have effect is without prejudice to anything done in reliance on them.
SCHEDULE 7 Stamp duty land tax: group relief and reconstruction and acquisition reliefs
Section 62
Part 1 Group relief
Group relief
1 (1) A transaction is exempt from charge if the vendor and purchaser are companies that at the effective date of the transaction are members of the same group.
(2) For the purposes of group relief—
(a) “company” means a body corporate, and
(b) companies are members of the same group if one is the 75% subsidiary of the other or both are 75% subsidiaries of a third company.
(3) For the purposes of group relief a company (“company A”) is the 75% subsidiary of another company (“company B”) if company B—
(a) is beneficial owner of not less than 75% of the ordinary share capital of company A,
(b) is beneficially entitled to not less than 75% of any profits available for distribution to equity holders of company A, and
(c) would be beneficially entitled to not less than 75% of any assets of company A available for distribution to its equity holders on a winding-up.
(4) The ownership referred to in sub-paragraph (3)(a) is ownership either directly or through another company or companies.
For the purposes of that provision the amount of ordinary share capital of company A owned by company B through another company or companies shall be determined in accordance with sections 1155 to 1157 of the Corporation Tax Act 2010.
(5) In sub-paragraphs (3)(a) and (4) above “ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company.
(6) Chapter 6 of Part 5 of the Corporation Tax Act 2010 (group relief: equity holders and profits or assets available for distribution) applies for the purposes of sub-paragraphs (3)(b) and (c) above as it applies for the purposes of section 151(4)(a) and (b) of that Act.
(6A) In that Chapter as it applies for the purposes of sub-paragraphs (3)(b) and (c) above, sections 171(1)(b) and (3), 173, 174 and 176 to 178 of that Act are to be treated as omitted.
(7) This paragraph is subject to paragraph 2 (restrictions on availability of group relief) and paragraphs 3 and 4A (withdrawal of group relief).
Restrictions on availability of group relief
2 (1) Group relief is not available if at the effective date of the transaction there are arrangements in existence by virtue of which, at that or some later time, a person has or could obtain, or any persons together have or could obtain, control of the purchaser but not of the vendor.
This does not apply to arrangements entered into with a view to an acquisition of shares by a company (“the acquiring company”)—
(a) in relation to which section 75 of the Finance Act 1986 (c. 41) (stamp duty: acquisition relief) will apply,
(b) in relation to which the conditions for relief under that section will be met, and
(c) as a result of which the purchaser will be a member of the same group as the acquiring company.
For other exceptions to this, see sub-paragraph (3A) and paragraphs 2A and 2B.
(2) Group relief is not available if the transaction is effected in pursuance of, or in connection with, arrangements under which—
(a) the consideration, or any part of the consideration, for the transaction is to be provided or received (directly or indirectly) by a person other than a group company, or
(b) the vendor and the purchaser are to cease to be members of the same group by reason of the purchaser ceasing to be a 75% subsidiary of the vendor or a third company.
(3) Arrangements are within sub-paragraph (2)(a) if under them the vendor or the purchaser, or another group company, is to be enabled to provide any of the consideration, or is to part with any of it, by or in consequence of the carrying out of a transaction or transactions involving, or any of them involving, a payment or other disposition by a person other than a group company.
(3A) Sub-paragraphs (1) and (2)(b) do not apply to arrangements in so far as they are for the purpose of facilitating a transfer of the whole or part of the business of a company to another company in relation to which—
(a) section 96 of the Finance Act 1997 is intended to apply (stamp duty relief: demutualisation of insurance companies), and
(b) the conditions for relief under that section are intended to be met.
(4) In sub-paragraphs (2)(a) and (3) a “group company” means a company that at the effective date of the transaction is a member of the same group as the vendor or the purchaser.
(4A) Group relief is not available if the transaction—
(a) is not effected for bona fide commercial reasons, or
(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.
(5) In this paragraph—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable; and
“control” has the meaning given by section 1124 of the Corporation Tax Act 2010.
Certain arrangements not within paragraph 2
2A (1) Arrangements entered into by a joint venture company which, apart from this section, would be arrangements to which paragraph 2 applies are not to be treated as such arrangements if and so long as—
(a) the arrangements fall within sub-paragraph (2), and
(b) none of the contingencies mentioned in sub-paragraph (3) to which the arrangements relate has occurred.
(2) Arrangements fall within this sub-paragraph if they are—
(a) an agreement which provides for the transfer of shares or securities in the joint venture company to one or more members of that company on, or as a result of, one or more contingencies mentioned in sub-paragraph (3) occurring, or
(b) a provision in a constitutional document of the joint venture company which provides for the suspension of a member’s voting rights on, or as a result of, one or more of those contingencies occurring.
(3) The contingencies referred to in sub-paragraph (1)(b) and (2) are—
(a) the voluntary departure of a member,
(b) the commencement of the liquidation, administration, administrative receivership or receivership of, or the entering into of a voluntary arrangement by, a member under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 or the commencement, or entering into, of equivalent proceedings or arrangements under the law of any country or territory outside the United Kingdom,
(c) a serious deterioration in the financial condition of a member,
(d) a change of control of a member,
(e) a default by a member in performing its obligations under any agreement between the members or with the joint venture company (which, for this purpose, includes any constitutional document of the joint venture company),
(f) an external change in the commercial circumstances in which the joint venture company operates such that its viability is threatened,
(g) an unresolved disagreement between the members, and
(h) any contingency of a similar kind to that mentioned in any of paragraphs (a) to (g) which is provided for, but not intended to happen, when the options arrangements in question were entered into.
(4) This paragraph does not apply if a member could alone or together with connected persons dictate the terms or timing of—
(a) the transfer of shares or securities, or
(b) the suspension of a member’s voting rights,
in advance of one or more of the contingencies occurring.
(5) For the purposes of sub-paragraph (4) members are not connected with each other by reason only of their membership of the joint venture company.
(6) In this paragraph—
“connected” has the same meaning as in section 1122 of the Corporation Tax Act 2010;
“constitutional document” means a memorandum of association, articles of association or any other similar document regulating the affairs of the joint venture company;
“joint venture company” means a company which—
has two or more member companies, and
carries on a commercial activity governed by an agreement regulating the affairs of its members;
“member” means a holder of shares or securities in the joint venture company.
Certain mortgage arrangements not within paragraph 2
2B (1) Arrangements entered into by a company which, apart from this paragraph, would be arrangements to which paragraph 2 applies are not to be treated as such arrangements if and so long as—
(a) the arrangements are a mortgage, secured by way of shares or securities in the company, which on default or the happening of any other event allows the mortgagee to exercise its rights against the mortgagor, and
(b) the mortgagee has not exercised its rights against the mortgagor.
(2) This paragraph does not apply if the mortgagee—
(a) possesses greater rights in respect of the shares or securities which are the subject of the mortgage than it requires to protect its interest as mortgagee, or
(b) could alone or together with connected persons dictate the terms or timing of the default or the happening of any event which allows it to exercise its rights against the mortgagor.
(3) For the purposes of sub-paragraph (2)(b) a mortgagee is not, by reason only of the mortgage, connected with a company whose shares or securities are the subject of the mortgage.
(4) In this paragraph—
“connected” has the same meaning as in section 1122 of the Corporation Tax Act 2010;
“mortgage” means—
in England ... , and Northern Ireland, any legal or equitable charge, and
in Scotland, any right in security.
Withdrawal of group relief
3 (1) Where in the case of a transaction (“the relevant transaction”) that is exempt from charge by virtue of paragraph 1 (group relief)—
(a) the purchaser ceases to be a member of the same group as the vendor—
(i) before the end of the period of three years beginning with the effective date of the transaction, or
(ii) in pursuance of, or in connection with, arrangements made before the end of that period,
and
(b) at the time the purchaser ceases to be a member of the same group as the vendor (“the relevant time”), it or a relevant associated company holds a chargeable interest—
(i) that was acquired by the purchaser under the relevant transaction, or
(ii) that is derived from a chargeable interest so acquired,
and that has not subsequently been acquired at market value under a chargeable transaction for which group relief was available but was not claimed,
group relief in relation to the relevant transaction, or an appropriate proportion of it, is withdrawn and tax is chargeable in accordance with this paragraph.
(2) The amount chargeable is the tax that would have been chargeable in respect of the relevant transaction but for group relief if the chargeable consideration for that transaction had been an amount equal to—
(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.
(3) In sub-paragraphs (1) and (2) “an appropriate proportion” means an appropriate proportion having regard to the subject matter of the relevant transaction and what is held at the relevant time by the transferee company or, as the case may be, by that company and its relevant associated companies.
(4) In this paragraph—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable; and
“relevant associated company”, in relation to the purchaser, means a company that—
is a member of the same group as the purchaser immediately before the purchaser ceases to be a member of the same group as the vendor, and
ceases to be a member of the same group as the vendor in consequence of the purchaser so ceasing.
(5) This paragraph has effect subject to paragraphs 4 and 4ZA (cases in which group relief not withdrawn) and paragraph 4A (withdrawal of group relief in certain cases involving successive transactions).
Cases in which group relief not withdrawn
4 (1) Group relief is not withdrawn under paragraph 3 in the following cases.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) The second case is where the purchaser ceases to be a member of the same group as the vendor by reason of anything done for the purposes of, or in the course of, winding up the vendor or another company that is above the vendor in the group structure.
(5) For the purposes of sub-paragraph (4) a company is “above” the vendor in the group structure if the vendor, or another company that is above the vendor in the group structure, is a 75% subsidiary of the company.
(6) The third case is where—
(a) the purchaser ceases to be a member of the same group as the vendor as a result of an acquisition of shares by another company (“the acquiring company”) in relation to which—
(i) section 75 of the Finance Act 1986 (c. 41) applies (stamp duty: acquisition relief), and
(ii) the conditions for relief under that section are met,
and
(b) the purchaser is immediately after that acquisition a member of the same group as the acquiring company.
(6A) The fourth case is where—
(a) the purchaser ceases to be a member of the same group as the vendor as a result of the transfer of the whole or part of the vendor's business to another company (“the acquiring company”) in relation to which—
(i) section 96 of the Finance Act 1997 applies (stamp duty relief: demutualisation of insurance companies), and
(ii) the conditions for relief under that section are met, and
(b) the purchaser is immediately after that transfer a member of the same group as the acquiring company.
(7) But if in a case within sub-paragraph (6) or (6A) —
(a) the purchaser ceases to be a member of the same group as the acquiring company—
(i) before the end of the period of three years beginning with the effective date of the relevant transaction, or
(ii) in pursuance of, or in connection with, arrangements made before the end of that period,
and
(b) at the time the purchaser ceases to be a member of the same group as the acquiring company, it or a relevant associated company holds a chargeable interest—
(i) that was acquired by the purchaser under the relevant transaction, or
(ii) that is derived from an interest so acquired,
and that has not subsequently been acquired at market value under a chargeable transaction for which group relief was available but was not claimed,
the provisions of this Part relating to group relief apply as if the purchaser had then ceased to be a member of the same group as the vendor.
(8) In sub-paragraph (7)—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable; and
“relevant associated company”, in relation to the purchaser, means a company that is a member of the same group as the purchaser that ceases to be a member of the same group as the acquiring company in consequence of the purchaser so ceasing.
Group relief not withdrawn where vendor leaves group
4ZA (1) Group relief is not withdrawn under paragraph 3 where the purchaser ceases to be a member of the same group as the vendor because the vendor leaves the group.
(2) The vendor is regarded as leaving the group if the companies cease to be members of the same group by reason of a transaction relating to shares in—
(a) the vendor, or
(b) another company that—
(i) is above the vendor in the group structure, and
(ii) as a result of the transaction ceases to be a member of the same group as the purchaser.
(3) For the purpose of sub-paragraph (2) a company is “above” the vendor in the group structure if the vendor, or another company that is above the vendor in the group structure, is a 75% subsidiary of the company.
(4) But if there is a change in the control of the purchaser after the vendor leaves the group, paragraphs 3, 4(6) and (7), 5 and 6 have effect as if the purchaser had then ceased to be a member of the same group as the vendor (but see sub-paragraph (7)).
(5) For the purposes of this paragraph there is a change in the control of the purchaser if—
(a) a person who controls the purchaser (alone or with others) ceases to do so,
(b) a person obtains control of the purchaser (alone or with others), or
(c) the purchaser is wound up.
(6) For the purposes of sub-paragraph (5) a person does not control, or obtain control of, the purchaser if that person is under the control of another person or other persons.
(7) Sub-paragraph (4) does not apply where—
(a) there is a change in the control of the purchaser because a loan creditor (within the meaning given by section 453 of the Corporation Tax Act 2010) obtains control of, or ceases to control, the purchaser, and
(b) the other persons who controlled the purchaser before that change continue to do so.
(8) In this paragraph references to “control” shall be interpreted in accordance with sections 450 and 451 of the Corporation Tax Act 2010 (subject to sub-paragraph (6)).
Withdrawal of group relief in certain cases involving successive transactions
4A (1) Where, in the case of a transaction (“the relevant transaction”) that is exempt from charge by virtue of paragraph 1 (group relief)—
(a) there is a change in the control of the purchaser,
(b) that change occurs—
(i) before the end of the period of three years beginning with the effective date of the relevant transaction, or
(ii) in pursuance of, or in connection with, arrangements made before the end of that period,
(c) apart from this paragraph, group relief in relation to the relevant transaction would not be withdrawn under paragraph 3, and
(d) any previous transaction falls within sub-paragraph (2),
paragraphs 3, 4 and 4ZA have effect in relation to the relevant transaction as if the vendor in relation to the earliest previous transaction falling within sub-paragraph (2) were the vendor in relation to the relevant transaction.
(1A) Sub-paragraph (1) has effect subject to sub-paragraph (3A).
(2) A previous transaction falls within this sub-paragraph if—
(a) the previous transaction is exempt from charge by virtue of paragraph 1, 7 or 8,
(b) the effective date of the previous transaction is less than three years before the date of the event falling within sub-paragraph (1)(a),
(c) the chargeable interest acquired under the relevant transaction by the purchaser in relation to that transaction is the same as, comprises, forms part of, or is derived from, the chargeable interest acquired under the previous transaction by the purchaser in relation to the previous transaction, and
(d) since the previous transaction, the chargeable interest acquired under that transaction has not been acquired by any person under a transaction that is not exempt from charge by virtue of paragraph 1, 7 or 8.
(3) For the purposes of this paragraph there is a change in the control of a company if—
(a) any person who controls the company (alone or with others) ceases to do so,
(b) a person obtains control of the company (alone or with others), or
(c) the company is wound up.
References to “control” in this paragraph shall be construed in accordance with sections 450 and 451 of the Corporation Tax Act 2010.
(3A) Sub-paragraph (1) does not apply where—
(a) there is a change in the control of the purchaser because a loan creditor (within the meaning given by section 453 of the Corporation Tax Act 2010) obtains control of, or ceases to control, the purchaser, and
(b) the other persons who controlled the purchaser before that change continue to do so.
(4) If two or more transactions effected at the same time are the earliest previous transactions falling within sub-paragraph (2), the reference in sub-paragraph (1) to the vendor in relation to the earliest previous transaction is a reference to the persons who are the vendors in relation to the earliest previous transactions.
(5) In this paragraph “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.
Recovery of group relief from another group company or controlling director
5 (1) This paragraph applies where—
(a) tax is chargeable under paragraph 3 (withdrawal of group relief),
(b) the amount so chargeable has been finally determined, and
(c) the whole or part of the amount so chargeable is unpaid six months after the date on which it became payable.
(2) The following persons may, by notice under paragraph 6, be required to pay the unpaid tax—
(a) the vendor;
(b) any company that at any relevant time was a member of the same group as the purchaser and was above it in the group structure;
(c) any person who at any relevant time was a controlling director of the purchaser or a company having control of the purchaser.
(3) For the purposes of sub-paragraph (2)(b)—
(a) a “relevant time” means any time between the effective date of the relevant transaction and the purchaser ceasing to be a member of the same group as the vendor; and
(b) a company (“company A”) is “above” another company (“company B”) in a group structure if company B, or another company that is above company B in the group structure, is a 75% subsidiary of company A.
(4) In sub-paragraph (2)(c)—
“director”, in relation to a company, has the meaning given by section 67(1) of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (read with subsection (2) of that section) and includes any person falling within section 452(1) of the Corporation Tax Act 2010; and
“controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with sections 450 and 451 of the Corporation Tax Act 2010).
Recovery of group relief: supplementary
6 (1) The Inland Revenue may serve a notice on a person within paragraph 5(2) above requiring him within 30 days of the service of the notice to pay the amount that remains unpaid.
(2) Any such notice must be served before the end of the period of three years beginning with the date of the final determination mentioned in paragraph 5(1)(b).
(3) The notice must state the amount required to be paid by the person on whom the notice is served.
(4) The notice has effect—
(a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and
(b) for the purposes of appeals,
as if it were a notice of assessment and that amount were an amount of tax due from that person.
(5) A person who has paid an amount in pursuance of a notice under this paragraph may recover that amount from the purchaser.
(6) A payment in pursuance of a notice under this paragraph is not allowed as a deduction in computing any income, profits or losses for any tax purpose.
Part 2 Reconstruction and acquisition reliefs
Reconstruction relief
7 (1) Where—
(a) a company (“the acquiring company”) acquires the whole or part of the undertaking of another company (“the target company”) in pursuance of a scheme for the reconstruction of the target company, and
(b) the first, second and third conditions specified below are met,
a land transaction entered into for the purposes of or in connection with the transfer of the undertaking or part is exempt from charge.
Relief under this paragraph is referred to in this Part as “reconstruction relief”.
(2) The first condition is that the consideration for the acquisition consists wholly or partly of the issue of non-redeemable shares in the acquiring company to all the shareholders of the target company.
“Non-redeemable shares” means shares that are not redeemable shares.
(3) Where the consideration for the acquisition consists partly of the issue of non-redeemable shares as mentioned in the first condition, that condition is met only if the rest of the consideration consists wholly of the assumption or discharge by the acquiring company of liabilities of the target company.
(4) The second condition is that after the acquisition has been made—
(a) each shareholder of each of the companies is a shareholder of the other, and
(b) the proportion of shares of one of the companies held by any shareholder is the same, or as nearly as may be the same, as the proportion of shares of the other company held by that shareholder.
(5) The third condition is that the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement 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.
(5A) 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 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).
(6) This paragraph is subject to paragraph 9 (withdrawal of reconstruction or acquisition relief).
Acquisition relief
8 (1) Where—
(a) a company (“the acquiring company”) acquires the whole or part of the undertaking of another company (“the target company”), and
(b) all the conditions specified below are met,
the amount of tax chargeable on a land transaction entered into for the purposes of or in connection with the transfer of the undertaking or part is limited to an amount equal to 0.5% of the chargeable consideration for the transaction.
Relief under this paragraph is referred to in this Part as “acquisition relief”.
(2) The first condition is that the consideration for the acquisition consists wholly or partly of the issue of non-redeemable shares in the acquiring company to—
(a) the target company, or
(b) all or any of the target company’s shareholders.
“Non-redeemable shares” means shares that are not redeemable shares.
(3) Where the consideration for the acquisition consists partly of the issue of non-redeemable shares as mentioned in the first condition, that condition is met only if the rest of the consideration consists wholly of—
(a) cash not exceeding 10% of the nominal value of the non-redeemable shares so issued, or
(b) the assumption or discharge by the acquiring company of liabilities of the target company, or
(c) both of those things.
(4) The second condition is that the acquiring company is not associated with another company that is a party to arrangements with the target company relating to shares of the acquiring company issued in connection with the transfer of the undertaking or part.
(5) For this purpose companies are associated if one has control of the other or both are controlled by the same person or persons.
The reference to control shall be construed in accordance with section 416 of the Taxes Act 1988.
(5A) The third condition is that the undertaking or part acquired by the acquiring company has as its main activity 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.
(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, capital gains tax or tax under this Part.
(5C) In this paragraph “arrangements” include any scheme, agreement or understanding, whether or not legally enforceable.
(6) This paragraph is subject to paragraph 9 (withdrawal of reconstruction or acquisition relief).
Withdrawal of reconstruction or acquisition relief
9 (1) Where in the case of a transaction (“the relevant transaction”) that is exempt by virtue of reconstruction relief or is subject to a reduced rate of tax by virtue of acquisition relief—
(a) control of the acquiring company changes—
(i) before the end of the period of three years beginning with the effective date of the transaction, or
(ii) in pursuance of, or in connection with, arrangements made before the end of that period,
and
(b) at the time control of the acquiring company changes (“the relevant time”), it or a relevant associated company holds a chargeable interest—
(i) that was acquired by the acquiring company under the relevant transaction, or
(ii) that is derived from an interest so acquired,
and that has not subsequently been acquired at market value under a chargeable transaction in relation to which reconstruction or acquisition relief was available but was not claimed,
reconstruction or acquisition relief in relation to the relevant transaction, or an appropriate proportion of it, is withdrawn and tax is chargeable in accordance with this paragraph.
(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—
(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.
(3) In sub-paragraphs (1) and (2) “an appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held at the relevant time by the acquiring company or, as the case may be, by that company and any relevant associated companies.
(4) In this paragraph “relevant associated company”, in relation to the acquiring company, means a company—
(a) that is controlled by the acquiring company immediately before the control of that company changes, and
(b) of which control changes in consequence of the change of control of that company.
(5) In this paragraph—
(a) “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
(b) “control” shall be construed in accordance with sections 450 and 451 of the Corporation Tax Act 2010; and
(c) references to control of a company changing are to the company becoming controlled—
(i) by a different person,
(ii) by a different number of persons, or
(iii) by two or more persons at least one of whom is not the person, or one of the persons, by whom the company was previously controlled.
(6) This paragraph has effect subject to paragraph 10 (cases in which reconstruction or acquisition relief not withdrawn).
Cases in which reconstruction or acquisition relief not withdrawn
10 (1) Reconstruction or acquisition relief is not withdrawn under paragraph 9 in the following cases.
(2) The first case is where control of the acquiring company changes as a result of a share transaction that is effected as mentioned in any of paragraphs (a) to (d) of paragraph 3 of Schedule 3 (transactions in connection with divorce etc).
(3) The second case is where control of the acquiring company changes as a result of a share transaction that—
(a) is effected as mentioned in paragraph 4(1) of Schedule 3, and
(b) meets the conditions in paragraph 4(2) of that Schedule (variation of testamentary dispositions etc).
(4) The third case is where control of the acquiring company changes as a result of an exempt intra-group transfer.
An “exempt intra-group transfer” means a transfer of shares effected by an instrument that is exempt from stamp duty by virtue of section 42 of the Finance Act 1930 (c. 28) or section 11 of the Finance Act (Northern Ireland) 1954 (c. 23 (N. I.)) (transfers between associated bodies corporate).
But see paragraph 11 (withdrawal of relief in case of subsequent non-exempt transfer).
(5) The fourth case is where control of the acquiring company changes as a result of a transfer of shares to another company in relation to which share acquisition relief applies.
“Share acquisition relief” means relief under section 77 of the Finance Act 1986 (c. 41) and a transfer is one in relation to which that relief applies if an instrument effecting the transfer is exempt from stamp duty by virtue of that provision. But see paragraph 11 (withdrawal in case of subsequent non-exempt transfer).
(6) The fifth case is where—
(a) control of the acquiring company changes as a result of a loan creditor becoming, or ceasing to be, treated as having control of the company, and
(b) the other persons who were previously treated as controlling the company continue to be so treated.
“Loan creditor” here has the meaning given by section 453 of the Corporation Tax Act 2010.
Withdrawal of reconstruction or acquisition relief on subsequent non-exempt transfer
11 (1) Where paragraph 10(4) (change of control of acquiring company as a result of exempt intra-group transfer) has effect to prevent the withdrawal of reconstruction or acquisition relief on a change of control of the acquiring company, but—
(a) a company holding shares in the acquiring company to which the exempt intra-group transfer related, or that are derived from shares to which that transfer related, ceases to be a member of the same group as the target company—
(i) before the end of the period of three years beginning with the effective date of the relevant transaction, or
(ii) in pursuance of or in connection with arrangements made before the end of that period,
and
(b) the acquiring company or a relevant associated company, at that time (“the relevant time”), holds a chargeable interest—
(i) that was transferred to the acquiring company by the relevant transaction, or
(ii) that is derived from an interest that was so transferred,
and that has not subsequently been transferred at market value by a chargeable transaction in relation to which reconstruction or acquisition relief was available but was not claimed,
reconstruction or acquisition relief in relation to the relevant transaction, or an appropriate proportion of it, is withdrawn and tax is chargeable in accordance with this paragraph.
(2) Where paragraph 10(5) (change of control of acquiring company as a result of a transfer to which share acquisition relief applies) has effect to prevent the withdrawal of reconstruction or acquisition relief on a change of control of the acquiring company, but—
(a) control of the other company mentioned in that provision changes—
(i) before the end of the period of three years beginning with the effective date of the relevant transaction, or
(ii) in pursuance of or in connection with arrangements made before the end of that period,
at a time when that company holds any shares transferred to it by the exempt transfer, or any shares derived from shares so transferred,
and
(b) the acquiring company or a relevant associated company, at that time (“the relevant time”), holds a chargeable interest—
(i) that was transferred to the acquiring company by the relevant transaction, or
(ii) that is derived from an interest that was so transferred,
and that has not subsequently been transferred at market value by a chargeable transaction in relation to which reconstruction or acquisition relief was available but was not claimed,
reconstruction or acquisition relief in relation to the relevant transaction, or an appropriate proportion of it, is withdrawn and tax is chargeable in accordance with this paragraph.
(3) 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 the market value of the subject matter of the transaction or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(4) In sub-paragraphs (1), (2) and (3) “an appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held at the relevant time by the acquiring company or, as the case may be, by that company and any relevant associated companies.
(5) In this paragraph “relevant associated company”, in relation to the acquiring company, means a company—
(a) that is controlled by the acquiring company immediately before the control of that company changes, and
(b) of which control changes in consequence of the change of control of that company.
(6) In this paragraph—
(a) “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
(b) “control” shall be construed in accordance with sections 450 and 451 of the Corporation Tax Act 2010; and
(c) references to control of a company changing are to the company becoming controlled—
(i) by a different person,
(ii) by a different number of persons, or
(iii) by two or more persons at least one of whom is not the person, or one of the persons, by whom the company was previously controlled.
Recovery of reconstruction or acquisition relief from another group company or controlling director
12 (1) This paragraph applies where—
(a) tax is chargeable under paragraph 9 or 11 (withdrawal of reconstruction or acquisition relief),
(b) the amount so chargeable has been finally determined, and
(c) the whole or part of the amount so chargeable is unpaid six months after the date on which it became payable.
(2) The following persons may, by notice under paragraph 13, be required to pay the unpaid tax—
(a) any company that at any relevant time was a member of the same group as the acquiring company and was above it in the group structure;
(b) any person who at any relevant time was a controlling director of the acquiring company or a company having control of the acquiring company.
(3) For the purposes of sub-paragraph (2) “relevant time” means any time between effective date of the relevant transaction and the change of control by virtue of which tax is chargeable.
(4) For the purposes of sub-paragraph (2)(a) a company (“company A”) is “above” another company (“company B”) in a group structure if company B, or another company that is above company B in the group structure, is a 75% subsidiary of company A.
(5) For the purposes of sub-paragraph (2)(b)—
(a) “director”, in relation to a company, has the meaning given by section 67(1) of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (read with subsection (2) of that section) and includes any person falling within section 452(1) of the Corporation Tax Act 2010; and
(b) “controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with sections 450 and 451 of the Corporation Tax Act 2010).
Recovery of reconstruction or acquisition relief: supplementary
13 (1) The Inland Revenue may serve a notice on a person within paragraph 12(2) above requiring him within 30 days of the service of the notice to pay the amount that remains unpaid.
(2) Any such notice must be served before the end of the period of three years beginning with the date of the final determination mentioned in paragraph 12(1)(b).
(3) The notice must state the amount required to be paid by the person on whom the notice is served.
(4) The notice has effect—
(a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and
(b) for the purposes of appeals,
as if it were a notice of assessment and that amount were an amount of tax due from that person.
(5) A person who has paid an amount in pursuance of a notice under this paragraph may recover that amount from the acquiring company.
(6) A payment in pursuance of a notice under this paragraph is not allowed as a deduction in computing any income, profits or losses for any tax purpose.
Section 65A
PART 1 Property authorised investment funds
PAIF seeding relief
1 (1) A land transaction is exempt from charge if conditions A to D are met.
Relief under this paragraph is referred to in this Part of this Act as “PAIF seeding relief”.
(2) Condition A is that the purchaser is a property AIF (see paragraph 2).
(3) Condition B is that the main subject-matter of the transaction consists of a major interest in land.
(4) Condition C is that the only consideration for the transaction is the issue of units in the property AIF to a person who is the vendor.
(5) Condition D is that the effective date of the transaction is a day within the seeding period (see paragraph 3).
(6) This paragraph is subject to paragraph 4 (restrictions on availability of relief) and paragraphs 5 to 8 (withdrawal of relief).
Meaning of “property AIF”
2 (1) This paragraph has effect for the purposes of this Schedule.
(2) A “property AIF” is an open-ended investment company to which Part 4A of the AIF (Tax) Regulations applies.
(3) In sub-paragraph (2) “open-ended investment company” is to be read in accordance with regulation 7(1) and (2) of those Regulations (part of an umbrella company is regarded as an open-ended investment company).
(4) Regulation 7(3)(a) of those Regulations applies for the purposes of this Schedule as it applies for the purposes of those Regulations but as if references to investments and scheme property were a reference to chargeable interests.
(5) References to a property AIF are treated as including a collective investment scheme which—
(a) is a company incorporated under the law of an EEA State ..., and
(b) is authorised under the law of that EEA State in a way which makes it, under that law, the equivalent of a property AIF as defined in sub-paragraph (2).
(6) In sub-paragraph (5) “collective investment scheme” has the meaning given by section 235 of FSMA 2000.
Meaning of “seeding period”
3 (1) In this Part of this Schedule, subject to sub-paragraph (2), the “seeding period” means—
(a) the period beginning with the first property seeding date and ending with the date of the first external investment into the property AIF, or
(b) if shorter, the period of 18 months beginning with the first property seeding date.
(2) The property AIF may elect to bring the seeding period to an end sooner than it would otherwise end under sub-paragraph (1).
Where an election is made, the seeding period is the period beginning with the first property seeding date and ending with the date specified in the election.
(3) An election under sub-paragraph (2) may be made—
(a) by being included in a notice accompanying a claim for PAIF seeding relief (see section 65A), or
(b) by separate notice in writing to HMRC.
(4) In sub-paragraphs (1) and (2), “the first property seeding date” means the earliest effective date of a transaction in respect of which conditions A to C in paragraph 1 are met.
(5) In this paragraph—
“external investment” means a non-land transaction in which the vendor is an external investor;
“external investor” means a person other than a person who has been a vendor in a transaction—
the effective date of which is on or before the date of the non-land transaction, and
in respect of which conditions A to C in paragraph 1 are met;
“non-land transaction” means a transaction by which the property AIF acquires assets which do not consist of or include a chargeable interest.
Restrictions on availability of relief
4 (1) This paragraph restricts the availability of PAIF seeding relief for a transaction in respect of which conditions A to D in paragraph 1 are met.
(2) PAIF seeding relief is not available unless, at the effective date of the transaction, the property AIF has arrangements in place requiring a person who is the vendor to notify the authorised corporate director of the property AIF of the following matters—
(a) the identity of the beneficial owner of the units in the property AIF received in consideration of the transaction, and
(b) any disposal of units in the property AIF on or after the effective date of that transaction by that owner (or, where that person is a company, by a group company) which is or could be a relevant disposal (see paragraph 7).
In paragraph (b) “group company” means a company which is a member of the same group of companies as the person mentioned in paragraph (a) for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief).
(3) PAIF seeding relief is not available if at the effective date of the transaction there are arrangements in existence by virtue of which, at that or some later time, a person who is the vendor makes or could make a disposal of units in the property AIF which is or could be a relevant disposal (see paragraph 7).
(4) PAIF seeding relief is not available if the transaction—
(a) is not effected for bona fide commercial reasons, or
(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.
Withdrawal of relief: ceasing to be property AIF
5 (1) Where PAIF seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the purchaser ceases to be a property AIF—
(a) at any time after the effective date of that transaction but within the seeding period,
(b) at any time in the control period (see paragraph 21), or
(c) in pursuance of, or in connection with, arrangements made before the end of the control period,
then, subject to sub-paragraph (2), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.
(2) Relief is withdrawn only if, at the time when the purchaser ceases to be a property AIF, the purchaser holds—
(a) the chargeable interest that was acquired by the purchaser under the relevant transaction, or
(b) a chargeable interest that is derived from that interest.
(3) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for PAIF seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the purchaser at the time it ceases to be a property AIF.
Withdrawal of relief: portfolio test not met
6 (1) Where PAIF seeding relief has been allowed in respect of a transaction, and the portfolio test is not met immediately before the end of the seeding period, the relief is withdrawn and tax is chargeable in accordance with sub-paragraph (2).
See sub-paragraph (7) for the meaning of “portfolio test”.
(2) The amount chargeable is the amount that would have been chargeable in respect of the transaction but for PAIF seeding relief.
(3) Where PAIF seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the portfolio test is met immediately before the end of the seeding period, but is not met—
(a) at a time in the control period, or
(b) at a time after the end of the control period, where the failure is pursuant to or in connection with arrangements made before the end of that period,
then, subject to sub-paragraph (4), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with sub-paragraph (5).
(4) The requirement to meet the portfolio test at a time mentioned in sub-paragraph (3)(a) or (b) applies only to times when the property AIF holds—
(a) the chargeable interest that was acquired by the property AIF under the relevant transaction, or
(b) a chargeable interest that is derived from that interest.
(5) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for PAIF seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(6) In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the property AIF at the time when the portfolio test is not met.
(7) The portfolio test is a requirement that the property AIF meets—
(a) the non-residential portfolio test (see sub-paragraph (8)), or
(b) the residential portfolio test (see sub-paragraph (9)).
(8) The “non-residential portfolio test” is met at any time if—
(a) the property AIF holds at least 10 seeded interests at that time,
(b) so much of the total chargeable consideration as is attributable to all the seeded interests held by the property AIF at that time (“the seeded portfolio”) is at least £100 million, and
(c) so much of the total chargeable consideration as is attributable to so many of those seeded interests as are interests in or over residential property (if any) does not exceed 10% of the seeded portfolio.
(9) The “residential portfolio test” is met at any time if—
(a) so much of the total chargeable consideration as is attributable to all the seeded interests held by the property AIF at that time is at least £100 million, and
(b) at least 100 of the seeded interests held by the property AIF at that time are interests in or over residential property.
(10) In sub-paragraphs (8) and (9)—
“seeded interest” means a chargeable interest acquired by the property AIF in a transaction for which PAIF seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent) (a “seeding transaction”), and
“total chargeable consideration” means the total of the chargeable consideration for all seeding transactions.
(11) For the purposes of this paragraph, section 116(7) does not apply (modification of what counts as residential property).
Withdrawal of relief: units disposed of
7 (1) This paragraph applies where—
(a) a person (“V”) makes a relevant disposal of one or more units in a property AIF—
(i) at any time in the seeding period,
(ii) at any time in the control period, or
(iii) in pursuance of, or in connection with, arrangements made before the end of the control period, and
(b) there is, in relation to that disposal, a relevant seeding transaction (see sub-paragraph (6)).
(2) In respect of a transaction which is, in relation to the relevant disposal, a relevant seeding transaction—
(a) PAIF seeding relief is withdrawn to the extent set out in this paragraph, and
(b) tax is chargeable in accordance with this paragraph.
(3) V's disposal of units in a property AIF is a “relevant disposal” for the purposes of this paragraph if, in relation to the disposal, A exceeds B.
(4) In this paragraph—
“A” means—
where the value of V's investment in the property AIF immediately before the disposal is equal to or greater than the total of the chargeable consideration for all relevant seeding transactions, the total of the chargeable consideration for all relevant seeding transactions, or
where the value of V's investment in the property AIF immediately before the disposal is less than the total of the chargeable consideration for all relevant seeding transactions, the value of V's investment in the property AIF immediately before the disposal, and
“B” means the value of V's investment in the property AIF immediately after the disposal.
(5) The amount chargeable in respect of a relevant seeding transaction (“RST”) is—
C CCRST × SDLT
where—
“C” means the difference between A and B;
“CCRST” means the total of the chargeable consideration for all relevant seeding transactions;
“SDLT” means the amount of tax that would have been chargeable in respect of RST but for PAIF seeding relief, ignoring any amount of tax that has been charged under this paragraph in respect of RST in relation to an earlier disposal of units by V.
(6) In this paragraph—
“group company” means (where V is a company) a company which is a member of the same group of companies as V for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief);
“relevant seeding transaction”, in relation to a disposal of units by V in a property AIF, means a seeding transaction—
the effective date of which is, or is before, the date of the disposal,
in which that property AIF is the purchaser, and
in which a vendor is—
V, or
(where V is a company) a company which is a group company at the time of the disposal;
“seeding transaction” means a transaction in respect of which PAIF seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent);
“the value of V's investment in the property AIF” at a particular time means the market value of all units in the property AIF held at that time by—
V, and
(where V is a company) a company which—
is a group company at that time, and
before that time, has been a vendor in one or more seeding transactions in which the property AIF was the purchaser.
(7) For the purposes of this paragraph, the “market value” on a particular date of units in the property AIF is an amount equal to the buying price (that is, the lower price) published by the authorised corporate director on that date (or, if no such price is published on that date, on the latest date before).
Withdrawal of relief: dwelling occupied by non-qualifying individual
8 (1) This paragraph applies to a transaction (“the relevant transaction”) if—
(a) PAIF seeding relief has been allowed in respect of the transaction,
(b) the main subject-matter of the transaction consists of a chargeable interest in or over land which is or includes a dwelling, and
(c) a non-qualifying individual (see paragraph 9) is permitted to occupy the dwelling at any time on or after the effective date of the transaction.
The dwelling which a non-qualifying individual is permitted to occupy is referred to as “the disqualifying dwelling”.
(2) The relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.
This is subject to sub-paragraphs (3) and (4).
(3) Relief is withdrawn only if, at the time a non-qualifying individual is permitted to occupy the disqualifying dwelling, the property AIF holds a chargeable interest in or over that dwelling—
(a) that was acquired by the property AIF under the relevant transaction, or
(b) that is derived from an interest so acquired.
(4) Where a non-qualifying individual is first permitted to occupy the disqualifying dwelling at a time after the end of the control period, relief is withdrawn only if, at that time, the purchaser in the relevant transaction fails to meet the genuine diversity of ownership condition set out in regulation 9A of the AIF (Tax) Regulations.
For the purposes of this sub-paragraph, regulation 9A(2)(a) of those Regulations is to be read as if the words “throughout the accounting period” were omitted.
(5) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for PAIF seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.
9 (1) In paragraph 8 “non-qualifying individual”, in relation to a land transaction and a property AIF, means any of the following—
(a) an individual who is a major participant in the property AIF;
(b) an individual who is connected with a major participant in the property AIF;
(c) an individual who is connected with the property AIF;
(d) a relevant settlor;
(e) the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);
(f) a relative of an individual falling within paragraph (b), (c) or (d), or the spouse or civil partner of a relative of an individual falling within paragraph (b), (c) or (d);
(g) a relative of the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);
(h) the spouse or civil partner of an individual falling within paragraph (g).
(2) An individual who participates in a property AIF is a “major participant” in it if the individual—
(a) is entitled to a share of at least 50% either of all the profits or income arising from the property AIF or of any profits or income arising from it that may be distributed to participants, or
(b) would in the event of the winding up of the property AIF be entitled to 50% or more of the assets of the property AIF that would then be available for distribution among the participants.
(3) The reference in sub-paragraph (2)(a) to profits or income arising from the property AIF is to profits or income arising from the acquisition, holding, management or disposal of the property subject to the property AIF.
(4) In this paragraph—
“relative” means brother, sister, ancestor or lineal descendant;
“relevant settlor”, in relation to a land transaction, means an individual who is a settlor in relation to a relevant settlement (as defined in sub-paragraph (5));
“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
(5) Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a land transaction, that settlement is a “relevant settlement” in relation to the transaction.
(6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).
(7) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph, but for those purposes, subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded.
PART 2 Co-ownership ... contractual schemes
Co-ownership scheme seeding relief
10 (1) A land transaction is exempt from charge if conditions A to D are met.
Relief under this paragraph is referred to in this Part of this Act as “co-ownership scheme seeding relief”.
(2) Condition A is that the purchaser is a co-ownership ... contractual scheme (see section 102A).
(3) Condition B is that the main subject-matter of the transaction consists of a major interest in land.
(4) Condition C is that the only consideration for the transaction is the issue of units in the co-ownership ... contractual scheme to a person who is the vendor.
(5) Condition D is that the effective date of the transaction is a day within the seeding period (see paragraph 11).
(5A) But condition D is met in a case where the purchaser is a Reserved Investor Fund (Contractual Scheme) only if an entry notice has been given in relation to the scheme on or before the effective date.
(5B) In sub-paragraph (5A), “entry notice” has the meaning it has in the Co-ownership Contractual Schemes (Tax) Regulations 2025.
(6) This paragraph is subject to paragraph 12 (restrictions on availability of relief) and paragraphs 13, 14, 16, 17 and 18 (withdrawal of relief).
Meaning of “seeding period”
11 (1) In this Part of this Schedule, subject to sub-paragraph (2), the “seeding period” means—
(a) the period beginning with the first property seeding date and ending with the date of the first external investment into the co-ownership ... contractual scheme, or
(b) if shorter, the period of 18 months beginning with the first property seeding date.
(2) The co-ownership ... contractual scheme may elect to bring the seeding period to an end sooner than it would otherwise end under sub-paragraph (1).
Where an election is made, the seeding period is the period beginning with the first property seeding date and ending with the date specified in the election.
(3) An election under sub-paragraph (2) may be made—
(a) by being included in a notice accompanying a claim for co-ownership scheme seeding relief (see section 65A), or
(b) by separate notice in writing to HMRC.
(4) In sub-paragraphs (1) and (2), “the first property seeding date” means the earliest effective date of a transaction in respect of which conditions A to C in paragraph 10 are met.
(5) In this paragraph—
“external investment” means a non-land transaction in which the vendor is an external investor;
“external investor” means a person other than a person who has been a vendor in a transaction—
the effective date of which is on or before the date of the non-land transaction, and
in respect of which conditions A to C in paragraph 10 are met;
“non-land transaction” means a transaction by which the scheme acquires assets which do not consist of or include a chargeable interest.
Restrictions on availability of relief
12 (1) This paragraph restricts the availability of co-ownership scheme seeding relief for a transaction in respect of which conditions A to D in paragraph 10 are met.
(2) Co-ownership scheme seeding relief is not available unless, at the effective date of the transaction, the arrangements constituting the co-ownership ... contractual scheme require a person who is the vendor to notify the operator of the scheme of the following matters—
(a) the identity of the beneficial owner of the units in the scheme received in consideration of the transaction, and
(b) any disposal of units in the scheme on or after the effective date of that transaction by that owner (or, where that person is a company, by a group company) which is or could be a relevant disposal (see paragraph 17).
In paragraph (b) “group company” means a company which is a member of the same group of companies as the person mentioned in paragraph (a) for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief).
(3) Co-ownership scheme seeding relief is not available if at the effective date of the transaction there are arrangements in existence by virtue of which, at that or some later time, a person who is the vendor makes or could make a disposal of units in the co-ownership ... contractual scheme which is or could be a relevant disposal (see paragraph 17).
(4) Co-ownership scheme seeding relief is not available if the transaction—
(a) is not effected for bona fide commercial reasons, or
(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.
Withdrawal of relief: ceasing to be co-ownership ... contractual scheme
13 (1) Where co-ownership scheme seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the purchaser ceases to be a co-ownership ... contractual scheme—
(a) at any time after the effective date of that transaction but within the seeding period,
(b) at any time in the control period (see paragraph 21), or
(c) in pursuance of, or in connection with, arrangements made before the end of the control period,
then, subject to sub-paragraph (2), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.
(2) Relief is withdrawn only if, at the time when the purchaser ceases to be a co-ownership ... contractual scheme, the purchaser holds—
(a) the chargeable interest that was acquired by the purchaser under the relevant transaction, or
(b) a chargeable interest that is derived from that interest.
(3) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for co-ownership scheme seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the purchaser at the time it ceases to be a co-ownership ... contractual scheme.
Withdrawal of relief: genuine diversity of ownership condition not met by COACS
14 (A1) This paragraph applies where co-ownership scheme seeding relief has been allowed in respect of a transaction (“the relevant transaction”) entered into by—
(a) a co-ownership authorised contractual scheme, or
(b) a Reserved Investor Fund (Contractual Scheme) that has since become a co-ownership authorised contractual scheme.
(1) Where , in relation to the relevant transaction, the genuine diversity of ownership condition (see paragraph 15) is not met—
(a) immediately before the end of the seeding period,
(b) at a time in the control period, or
(c) at a time after the end of the control period, where the failure is pursuant to or in connection with arrangements made before the end of that period,
then, subject to sub-paragraph (2), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.
(2) The requirement to meet the genuine diversity of ownership condition at a time mentioned in sub-paragraph (1) applies only to times when the co-ownership authorised contractual scheme holds—
(a) the chargeable interest that was acquired by the scheme under the relevant transaction, or
(b) a chargeable interest that is derived from that interest.
(3) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for co-ownership scheme seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(4) In sub-paragraphs (1) and (3) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the scheme at the time when the genuine diversity of ownership condition is not met.
(5) For the purposes of this paragraph, the operator of a co-ownership authorised contractual scheme may apply to HMRC in writing for clearance that the scheme meets the genuine diversity of ownership condition, and where an application is made, HMRC must notify the scheme of its decision within 28 days of the receipt of all the information that is needed to make the decision.
(6) Any such clearance has effect only for so long as the information on which HMRC relies in granting clearance is materially unchanged and the scheme is operated in accordance with it (including, in particular, continuing to operate in accordance with condition C of the genuine diversity of ownership condition).
Genuine diversity of ownership condition
15 (1) This paragraph has effect for the purposes of paragraphs 14 and 18(4).
(1A) Sub-paragraphs (2) to (8) and (9) apply where the relevant transaction was entered into by a co-ownership authorised contractual scheme.
(1B) Sub-paragraph (8A) applies where the relevant transaction was entered into by a Reserved Investor Fund (Contractual Scheme) that has since become a co-ownership authorised contractual scheme.
(2) A co-ownership authorised contractual scheme meets the genuine diversity of ownership condition at any time when it meets conditions A to C.
(3) Condition A is that the scheme documents, which are available to investors and to HMRC, contain—
(a) a statement specifying the intended categories of investor,
(b) an undertaking that units in the scheme will be widely available, and
(c) an undertaking that units in the scheme will be marketed and made available in accordance with the requirements of sub-paragraph (6)(a).
(4) Condition B is that—
(a) the specification of the intended categories of investor does not have a limiting or deterrent effect, and
(b) any other terms or conditions governing participation in the scheme do not have a limiting or deterrent effect.
(5) In sub-paragraph (4) “limiting or deterrent effect” means an effect which—
(a) limits investors to a limited number of specific persons or specific groups of connected persons, or
(b) deters a reasonable investor falling within one of (what are specified as) the intended categories of investor from investing in the scheme.
(6) Condition C is that—
(a) units in the scheme are marketed and made available—
(i) sufficiently widely to reach the intended categories of investors, and
(ii) in a manner appropriate to attract those categories of investors, and
(b) a person who falls within one of the intended categories of investors can, upon request to the operator of the scheme, obtain information about the scheme and acquire units in it.
(7) A scheme is not regarded as failing to meet condition C at any time by reason of the scheme's having, at that time, no capacity to receive additional investments, unless—
(a) the capacity of the scheme to receive investments in it is fixed by the scheme documents (or otherwise), and
(b) a pre-determined number of specific persons or specific groups of connected persons make investments in the scheme which collectively exhaust all, or substantially all, of that capacity.
(8) A co-ownership authorised contractual scheme also meets the genuine diversity of ownership condition at any time when—
(a) there is a feeder fund in relation to the scheme (see paragraph 20), and
(b) conditions A to C are met in relation to the scheme after taking into account—
(i) the scheme documents relating to the feeder fund, and
(ii) the intended investors in the feeder fund.
(8A) A co-ownership authorised contractual scheme which at the time of the relevant transaction was a Reserved Investor Fund (Contractual Scheme) meets the genuine diversity of ownership condition at any time that the scheme—
(a) meets the genuine diversity of ownership condition under regulation 7 of the Co-ownership Contractual Schemes (Tax) Regulations 2025 (but not solely by virtue of regulation 9 of those Regulations), or
(b) meets the non-close condition under regulation 8 of those Regulations (but not solely by virtue of regulation 9 of those Regulations).
(9) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph.
Withdrawal of relief: portfolio test not met
16 (1) Where co-ownership scheme seeding relief has been allowed in respect of a transaction, and the portfolio test is not met immediately before the end of the seeding period, the relief is withdrawn and tax is chargeable in accordance with sub-paragraph (2).
See sub-paragraph (7) for the meaning of “portfolio test”.
(2) The amount chargeable is the amount that would have been chargeable in respect of the transaction but for co-ownership scheme seeding relief.
(3) Where co-ownership scheme seeding relief has been allowed in respect of a transaction (“the relevant transaction”), and the portfolio test is met immediately before the end of the seeding period, but is not met—
(a) at a time in the control period, or
(b) at a time after the end of the control period, where the failure is pursuant to or in connection with arrangements made before the end of that period,
then, subject to sub-paragraph (4), the relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with sub-paragraph (5).
(4) The requirement to meet the portfolio test at a time mentioned in sub-paragraph (3)(a) or (b) applies only to times when the co-ownership ... contractual scheme holds—
(a) the chargeable interest that was acquired by the scheme under the relevant transaction, or
(b) a chargeable interest that is derived from that interest.
(5) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for co-ownership scheme seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(6) In sub-paragraphs (3) and (5) an “appropriate proportion” means an appropriate proportion having regard to the subject-matter of the relevant transaction and what is held by the scheme at the time when the portfolio test is not met.
(7) The portfolio test is a requirement that the scheme meets—
(a) the non-residential portfolio test (see sub-paragraph (8)), or
(b) the residential portfolio test (see sub-paragraph (9)).
(8) The “non-residential portfolio test” is met at any time if—
(a) the scheme holds at least 10 seeded interests at that time,
(b) so much of the total chargeable consideration as is attributable to all the seeded interests held by the scheme at that time (“the seeded portfolio”) is at least £100 million, and
(c) so much of the total chargeable consideration as is attributable to so many of those seeded interests as are interests in or over residential property (if any) does not exceed 10% of the seeded portfolio.
(9) The “residential portfolio test” is met at any time if—
(a) so much of the total chargeable consideration as is attributable to all the seeded interests held by the scheme at that time is at least £100 million, and
(b) at least 100 of the seeded interests held by the scheme at that time are interests in or over residential property.
(10) In sub-paragraphs (8) and (9)—
“seeded interest” means a chargeable interest acquired by the scheme in a transaction for which co-ownership scheme seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent) (a “seeding transaction”), and
“total chargeable consideration” means the total of the chargeable consideration for all seeding transactions.
(11) For the purposes of this paragraph, section 116(7) does not apply (modification of what counts as residential property).
Withdrawal of relief: units disposed of
17 (1) This paragraph applies where—
(a) a person (“V”) makes a relevant disposal of one or more units in a co-ownership ... contractual scheme—
(i) at any time in the seeding period,
(ii) at any time in the control period, or
(iii) in pursuance of, or in connection with, arrangements made before the end of the control period, and
(b) there is, in relation to that disposal, a relevant seeding transaction (see sub-paragraph (6)).
(2) In respect of a transaction which is, in relation to the relevant disposal, a relevant seeding transaction—
(a) co-ownership scheme seeding relief is withdrawn to the extent set out in this paragraph, and
(b) tax is chargeable in accordance with this paragraph.
(3) V's disposal of units in a scheme is a “relevant disposal” for the purposes of this paragraph if, in relation to the disposal, A exceeds B.
(4) In this paragraph—
“A” means—
where the value of V's investment in the scheme immediately before the disposal is equal to or greater than the total of the chargeable consideration for all relevant seeding transactions, the total of the chargeable consideration for all relevant seeding transactions, or
where the value of V's investment in the scheme immediately before the disposal is less than the total of the chargeable consideration for all relevant seeding transactions, the value of V's investment in the scheme immediately before the disposal, and
“B” means the value of V's investment in the scheme immediately after the disposal.
(5) The amount chargeable in respect of a relevant seeding transaction (“RST”) is—
C CCRST × SDLT
where—
“C” means the difference between A and B;
“CCRST” means the total of the chargeable consideration for all relevant seeding transactions;
“SDLT” means the amount of tax that would have been chargeable in respect of RST but for co-ownership scheme seeding relief, ignoring any amount of tax that has been charged under this paragraph in respect of RST in relation to an earlier disposal of units by V.
(6) In this paragraph—
“group company” means (where V is a company) a company which is a member of the same group of companies as V for the purposes mentioned in paragraph 1(2) of Schedule 7 (group relief);
“relevant seeding transaction”, in relation to a disposal of units by V in a co-ownership ... contractual scheme, means a seeding transaction—
the effective date of which is, or is before, the date of the disposal,
in which that scheme is the purchaser, and
in which a vendor is—
V, or
(where V is a company) a company which is a group company at the time of the disposal;
“seeding transaction” means a transaction in respect of which co-ownership scheme seeding relief is allowed (whether or not relief is subsequently withdrawn to any extent);
“the value of V's investment in the scheme” at a particular time means the market value of all units in the co-ownership ... contractual scheme held at that time by—
V, and
(where V is a company) a company which—
is a group company at that time, and
before that time, has been a vendor in one or more seeding transactions in which the scheme was the purchaser.
(7) For the purposes of this paragraph, the “market value” on a particular date of units in the scheme is an amount equal to the buying price (that is, the lower price) published by the operator on that date (or, if no such price is published on that date, on the latest date before).
Withdrawal of relief: dwelling occupied by non-qualifying individual
18 (1) This paragraph applies to a transaction (“the relevant transaction”) if—
(a) co-ownership scheme seeding relief has been allowed in respect of the transaction,
(b) the main subject-matter of the transaction consists of a chargeable interest in or over land which is or includes a dwelling, and
(c) a non-qualifying individual (see paragraph 19) is permitted to occupy the dwelling at any time on or after the effective date of the transaction.
The dwelling which a non-qualifying individual is permitted to occupy is referred to as “the disqualifying dwelling”.
(2) The relief, or an appropriate proportion of it, is withdrawn, and tax is chargeable in accordance with this paragraph.
This is subject to sub-paragraphs (3) and (4).
(3) Relief is withdrawn only if, at the time a non-qualifying individual is permitted to occupy the disqualifying dwelling, the co-ownership ... contractual scheme holds a chargeable interest in or over that dwelling—
(a) that was acquired by the scheme under the relevant transaction, or
(b) that is derived from an interest so acquired.
(4) Where a non-qualifying individual is first permitted to occupy the disqualifying dwelling at a time after the end of the control period, relief is withdrawn only if, at that time, the scheme fails to meet the genuine diversity of ownership condition (see paragraph 15).
(5) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for co-ownership scheme seeding relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(6) In sub-paragraphs (2) and (5), an “appropriate proportion” means an appropriate proportion having regard to the extent to which the subject-matter of the relevant transaction was an interest in or over land other than the disqualifying dwelling.
19 (1) In paragraph 18 “non-qualifying individual”, in relation to a land transaction and a co-ownership ... contractual scheme, means any of the following—
(a) an individual who is a major participant in the scheme;
(b) an individual who is connected with a major participant in the scheme;
(c) an individual who is connected with the operator of the scheme (see section 102A) or the depositary of the scheme;
(d) a relevant settlor;
(e) the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);
(f) a relative of an individual falling within paragraph (b), (c) or (d), or the spouse or civil partner of a relative of an individual falling within paragraph (b), (c) or (d);
(g) a relative of the spouse or civil partner of an individual falling within paragraph (b), (c) or (d);
(h) the spouse or civil partner of an individual falling within paragraph (g).
(2) An individual who participates in a scheme is a “major participant” in it if the individual—
(a) is entitled to a share of at least 50% either of all the profits or income arising from the scheme or of any profits or income arising from it that may be distributed to participants, or
(b) would in the event of the winding up of the scheme be entitled to 50% or more of the assets of the scheme that would then be available for distribution among the participants.
(3) The reference in sub-paragraph (2)(a) to profits or income arising from the scheme is to profits or income arising from the acquisition, holding, management or disposal of the property subject to the scheme.
(4) In this paragraph—
“depositary”, in relation to a co-ownership ... contractual scheme, means the person to whom the property subject to the scheme is entrusted for safekeeping;
“relative” means brother, sister, ancestor or lineal descendant;
“relevant settlor”, in relation to a land transaction, means an individual who is a settlor in relation to a relevant settlement (as defined in sub-paragraph (5));
“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
(5) Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a land transaction, that settlement is a “relevant settlement” in relation to the transaction.
(6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).
(7) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this paragraph, but for those purposes, subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded.
PART 3 Interpretation
“Feeder fund” and “units”
20 In this Schedule—
a “feeder fund” of a property AIF means a unit trust scheme—
one of the main objects of which is investment in the property AIF, and
which is managed by the same person as the property AIF;
a “feeder fund” of a co-ownership ... contractual scheme means an open-ended investment company, an offshore fund or a unit trust scheme—
one of the main objects of which is investment in the co-ownership ... contractual scheme, and
which is managed by the same person as the scheme;
“units in the property AIF” means—
units in the property AIF (and, where the property AIF is a part of an umbrella company as mentioned in regulation 7(1) and (2) of the AIF (Tax) Regulations, this means units in the separate pool to which that part of the umbrella company relates), and
units in a feeder fund of the property AIF;
“units in the co-ownership ... contractual scheme” means—
units in the co-ownership ... contractual scheme (and, where the co-ownership ... contractual scheme is a sub-scheme of an umbrella scheme (see section 102A(3) and (4)), this means units in the separate pool to which that sub-scheme relates), and
units in a feeder fund of the scheme;
“units” means the rights or interests (however described) of the participants in the property AIF or the co-ownership ... contractual scheme.
Interpretation of other terms
21 In this Schedule—
the “AIF (Tax) Regulations” means the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964);
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
“attributable” means attributable on a just and reasonable basis;
“authorised corporate director”, in relation to a property AIF, has the same meaning as in regulation 8 of the AIF (Tax) Regulations;
“co-ownership scheme seeding relief” means relief under paragraph 10;
“control period” means the period of 3 years beginning with the day following the last day of the seeding period;
“co-ownership authorised contractual scheme” is to be construed in accordance with section 102A (see in particular subsections (2), (2A), (5), (7) and (8) of that section);
“CTA 2010” means the Corporation Tax Act 2010;
“FSMA 2000” means the Financial Services and Markets Act 2000;
the “genuine diversity of ownership condition”, in relation to a co-ownership authorised contractual scheme, has the meaning given by paragraph 15;
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;
“non-qualifying individual” has the meaning given by paragraph 9 (in relation to a property AIF) and paragraph 19 (in relation to a co-ownership ... contractual scheme);
“offshore fund” has the meaning given by section 355 of the Taxation (International and Other Provisions) Act 2010;
“open-ended investment company” has the meaning given by section 236 of FSMA 2000;
“operator”, in relation to a co-ownership ... contractual scheme, has the same meaning as in section 102A;
“PAIF seeding relief” means relief under paragraph 1;
“participant” is to be read in accordance with section 235 of FSMA 2000;
“portfolio test” has the meaning given by paragraph 6(7) (in relation to a property AIF) and paragraph 16(7) (in relation to a co-ownership ... contractual scheme);
“property AIF” is to be construed in accordance with paragraph 2 (see in particular sub-paragraphs (2), (3) and (5) of that paragraph);
“relevant disposal” has the meaning given by paragraph 7(3) (in relation to a property AIF) and paragraph 17(3) (in relation to a co-ownership ... contractual scheme);
“seeding period” has the meaning given by paragraph 3 (in relation to a property AIF) and paragraph 11 (in relation to a co-ownership ... contractual scheme);
“unit trust scheme” has the meaning given by section 237(1) of FSMA 2000.
Section 68
Charities relief
1 (1) A land transaction is exempt from charge if the purchaser is a charity and the following conditions are met.
Relief under this Schedule is referred to in this Part as “charities relief”.
(2) The first condition is that the purchaser must intend to hold the subject-matter of the transaction for qualifying charitable purposes, ...
(3) The second condition is that the transaction must not have been entered into for the purpose of avoiding tax under this Part (whether by the purchaser or any other person).
(3A) For the purposes of this Schedule, a charity (“C”) holds a chargeable interest for qualifying charitable purposes if it holds it—
(a) for use in furtherance of the charitable purposes of C or another charity, or
(b) as an investment from which the profits are applied to the charitable purposes of C.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Withdrawal of charities relief
2 (1) Where in the case of a transaction (“the relevant transaction”) that is exempt by virtue of this Schedule —
(a) a disqualifying event occurs—
(i) before the end of the period of three years beginning with the effective date of the transaction, or
(ii) in pursuance of, or in connection with, arrangements made before the end of that period,
and
(b) at the time of the disqualifying event the purchaser holds a chargeable interest—
(i) that was acquired by the purchaser under the relevant transaction, or
(ii) that is derived from an interest so acquired,
charities relief in relation to the relevant transaction, or an appropriate proportion of it, is withdrawn and tax is chargeable in accordance with this paragraph.
(2) The amount chargeable is the amount that would have been chargeable in respect of the relevant transaction but for charities relief or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
(3) For the purposes of this paragraph a “disqualifying event” means—
(a) the purchaser ceasing to be established for charitable purposes only, or
(b) the subject-matter of the transaction, or any interest or right derived from it, being used or held by the purchaser otherwise than for qualifying charitable purposes.
(4) In sub-paragraphs (1) and (2) an “appropriate proportion” means an appropriate proportion having regard to—
(a) what was acquired by the purchaser under the relevant transaction and what is held by the purchaser at the time of the disqualifying event, and
(b) the extent to which what is held by the purchaser at that time becomes used or held for purposes other than qualifying charitable purposes.
(5) In this paragraph “qualifying charitable purposes” has the same meaning as in paragraph 1.
Cases where first condition not fully met
3 (1) This paragraph applies where—
(a) a land transaction is not exempt from charge under paragraph 1 because the first condition in that paragraph is not met, but
(b) the purchaser (“C”) intends to hold the greater part of the subject-matter of the transaction for qualifying charitable purposes.
(2) In such a case—
(a) the transaction is exempt from charge, but
(b) for the purposes of paragraph 2 (withdrawal of charities relief) “disqualifying event” includes—
(i) any transfer by C of a major interest in the whole or any part of the subject-matter of the transaction, or
(ii) any grant by C at a premium of a low-rental lease of the whole or any part of that subject-matter,
that is not made in furtherance of the charitable purposes of C.
(3) For the purposes of sub-paragraph (2)(b)(ii)—
(a) a lease is granted “at a premium” if there is consideration other than rent, and
(b) a lease is a “low-rental”lease if the annual rent (if any) is less than £1,000 a year.
(4) In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 2—
(a) the date of the event for those purposes is the effective date of the transaction;
(b) paragraph 2 has effect as if—
(i) in sub-paragraph (1)(b), for “at the time of” there were substituted “ immediately before ”,
(ii) in sub-paragraph (4)(a), for “at the time of” there were substituted “ immediately before and immediately after ”, and
(iii) sub-paragraph (4)(b) were omitted.
(5) In this paragraph—
“qualifying charitable purposes” has the same meaning as in paragraph 1;
“rent” has the same meaning as in Schedule 5 (amount of tax chargeable: rent) and “annual rent” has the same meaning as in paragraph 9A of that Schedule.
Joint purchasers: partial relief
3A (1) Sub-paragraphs (3) to (5) apply in any case where—
(a) there are two or more purchasers under a land transaction,
(b) the purchasers acquire the subject-matter of the transaction as tenants in common (or, in Scotland, as owners in common),
(c) at least one of them is, and at least one of them is not, a qualifying charity, and
(d) no purchaser enters into the transaction for the purpose of the avoidance of tax under this Part (whether by that purchaser or another person).
(2) A charity (“C”) that is a purchaser under a land transaction is a “qualifying charity” in relation to the transaction if C intends to hold its undivided share of the subject-matter of the transaction for qualifying charitable purposes.
(3) The tax chargeable in respect of the transaction is reduced by the amount of the relief under sub-paragraph (4).
(4) The relief is equal to the relevant proportion of the tax that would have been chargeable in respect of the transaction without this Schedule.
(5) The “relevant proportion”, in the case of a qualifying charity, is the lower of P1 and P2, where—
P1 is the proportion of the subject-matter of the transaction that is acquired by all the qualifying charities that are purchasers under the transaction (in aggregate);
P2 is the proportion of the chargeable consideration for the transaction that is given by all the qualifying charities that are purchasers under the transaction (in aggregate).
Withdrawal of relief given under paragraph 3A
3B (1) This paragraph applies where—
(a) relief has been given under paragraph 3A in respect of a transaction (“the relevant transaction”),
(b) a disqualifying event occurs in relation to a qualifying charity (“C”) which was a purchaser under the transaction, and
(c) the disqualifying event occurs in the circumstances required by sub-paragraphs (2) and (3).
(2) The disqualifying event must occur—
(a) before the end of the period of 3 years beginning with the effective date of the transaction, or
(b) in pursuance of, or in connection with, arrangements made before the end of that period.
(3) At the time of the disqualifying event C must hold a chargeable interest that—
(a) was acquired by C under the relevant transaction, or
(b) is derived from an interest so acquired.
(4) There is a “disqualifying event” in relation to C if —
(a) C ceases to be established for charitable purposes only, or
(b) the chargeable interest acquired by C under the transaction, or any interest or right derived from that interest, is used or held by C otherwise than for qualifying charitable purposes.
(5) C's portion of the relief mentioned in sub-paragraph (1)(a), or an appropriate proportion of C's portion of that relief, is withdrawn and tax is chargeable in accordance with this paragraph.
(6) The amount chargeable is equal to C's portion of the relief or, as the case may be, the appropriate proportion of C's portion of the relief.
(7) C's portion of the relief depends on whether P1 or P2 was lower in the calculation under paragraph 3A(5).
(8) If P1 was lower, C's portion of the relief is equal to—
p1 P1 × R
where—
p1 is the proportion of the subject-matter of the transaction that was acquired by C under the transaction;
P1 has the same meaning as in paragraph 3A(5);
(9) If P2 was lower, C's portion of the relief is equal to—
p2 P2 × R
where—
p2 is the proportion of chargeable consideration for the transaction that was given by C;
P2 has the same meaning as in paragraph 3A(5);
(10) In sub-paragraphs (5) and (6) “appropriate proportion” means an appropriate proportion having regard to—
(a) what was acquired by C under the relevant transaction and what is held by C at the time of the disqualifying event, and
(b) the extent to which what is held by C at that time becomes used or held for purposes other than qualifying charitable purposes.
Partial relief: charity not fully meeting the “qualifying charity” condition
3C (1) This paragraph applies where—
(a) a charity (“C”) is one of two or more purchasers acquiring the subject-matter of a land transaction (“the relevant transaction”) as tenants in common (or, in Scotland, as owners in common),
(b) C is not a qualifying charity in relation to the transaction,
(c) paragraph 3A(3) to (5) would apply if C were a qualifying charity, and
(d) C intends to hold the greater part of its undivided share of the subject-matter of the transaction for qualifying charitable purposes.
(2) In such a case—
(a) paragraph 3A has effect as if C were a qualifying charity, but
(b) for the purposes of paragraph 3B (withdrawal of relief under paragraph 3A) “disqualifying event” includes any additional disqualifying transaction.
(3) The following are “additional disqualifying transactions” if they are not made in furtherance of the charitable purposes of C—
(a) any transfer by C of a major interest in the whole or any part of the chargeable interest acquired by C under the relevant transaction;
(b) any grant by C at a premium of a low-rental lease of the whole or any part of that chargeable interest.
(4) Paragraph 3(3) (meaning of “at a premium” and “low-rental”) applies for the purposes of sub-paragraph (3)(b) as it applies for the purposes of paragraph 3(2)(b)(ii).
(5) In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 3B—
(a) the date of the event for those purposes is the effective date of the transaction;
(b) paragraph 3B has effect with the modifications in sub-paragraph (6).
(6) The modifications to paragraph 3B are—
(a) in sub-paragraph (3), for “At the time of” substitute “ Immediately before ”;
(b) in sub-paragraph (10)(a), for “at the time of” substitute “ immediately before and immediately after ”;
(c) omit sub-paragraph (10)(b).
Charitable trusts
4 (1) This Schedule applies in relation to a charitable trust as it applies in relation to a charity.
(2) In this paragraph “charitable trust” means—
(a) a trust of which all the beneficiaries are charities, or
(b) a unit trust scheme in which all the unit holders are charities,
...
(3) In this Schedule as it applies by virtue of this paragraph—
(a) references in paragraph 1(3A) to the charitable purposes of C are to those of the beneficiaries or unit holders, or any of them;
(b) the references to the purchaser in paragraph 2(3)(a), and to C in paragraph 3B(4)(a), are to any of the beneficiaries or unit holders;
(c) the references in paragraphs 3(2)(b) and 3C(3) to the charitable purposes of C are to those of the beneficiaries or unit holders, or any of them.
SCHEDULE 9 Stamp duty land tax: right to buy, shared ownership leases etc
Section 70
Right to buy transactions
1 (1) In the case of a right to buy transaction—
(a) section 51(1) (contingent consideration to be included in chargeable consideration on assumption that contingency will occur) does not apply, and
(b) any consideration that would be payable only if a contingency were to occur, or that is payable only because a contingency has occurred, does not count as chargeable consideration.
(2) A “right to buy transaction” means—
(a) the sale of a dwelling at a discount, or the grant of a lease of a dwelling at a discount, by a relevant public sector body, or
(b) the sale of a dwelling, or the grant of a lease of a dwelling, in pursuance of the preserved right to buy.
(3) The following are relevant public sector bodies for the purposes of sub-paragraph (2)(a):
Government
A Minister of the Crown
The Scottish Ministers
A Northern Ireland department
Local Government
A local housing authority within the meaning of the Housing Act 1985 (c. 68)
A county council in England
A council constituted under section 2 of the Local Government etc. (Scotland) Act 1994 (c. 39), the common good of such a council or any trust under its control
A district council within the meaning of the Local Government Act (Northern Ireland) 1972 (c. 9 (N.I.))
Social housing
The Regulator of Social Housing
Scottish Homes
The Northern Ireland Housing Executive
A non-profit registered provider of social housing
A registered social landlord
A housing action trust established under Part 3 of the Housing Act 1988 (c. 50)
New towns and development corporations etc.
The Homes and Communities Agency
The Greater London Authority so far as exercising its housing or regeneration functions or its new towns and urban development functions
A development corporation established by an order made, or having effect as if made, under the New Towns Act 1981 (c. 64)
A development corporation established by an order made, or having effect as if made, under the New Towns (Scotland) Act 1968 (c. 16)
A new town commission established under section 7 of the New Towns Act (Northern Ireland) 1965 (c. 13 (N.I.))
An urban development corporation established by an order made under section 135 of the Local Government, Planning and Land Act 1980 (c. 65)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Police
A local policing body within the meaning of section 101(1) of the Police Act 1996 (c. 16)
The Scottish Police Authority
The Northern Ireland Policing Board
Miscellaneous
An Education and Libraries Board within the meaning of the Education and Libraries (Northern Ireland) Order 1986 (S.I. 1986/594 (N.I. 3))
The United Kingdom Atomic Energy Authority
Any person mentioned in paragraphs (g), (k), (l) or (n) of section 61(11) of the Housing (Scotland) Act 1987 (c. 26)
A body prescribed for the purposes of this sub-paragraph by Treasury order.
(4) For the purposes of sub-paragraph (2)(b) the transfer of a dwelling, or the grant of a lease of a dwelling, is made in pursuance of the preserved right to buy if—
(a) the vendor is—
(i) in England and Wales, a person against whom the right to buy under Part 5 of the Housing Act 1985 (c. 68) is exercisable by virtue of section 171A of that Act, or
(ii) in Scotland, a person against whom the right to buy under section 61 of the Housing (Scotland) Act 1987 is exercisable by virtue of section 81A of that Act,
(which provide for the preservation of the right to buy on disposal to a private sector landlord),
(b) the purchaser is the qualifying person for the purposes of the preserved right to buy, and
(c) the dwelling is the qualifying dwelling-house in relation to the purchaser.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) A grant under section 19 of the Housing and Regeneration Act 2008 which—
(a) is made by virtue of section 35 of that Act, or
(b) is otherwise made to a relevant provider of social housing (within the meaning of section 35 of that Act) in respect of discounts given by the provider on disposals of dwellings to tenants,
does not count as part of the chargeable consideration for a right to buy transaction to which the vendor is a relevant provider of social housing.
(7) A grant by the Greater London Authority which—
(a) is made by virtue of section 35 of the Housing and Regeneration Act 2008 as applied by section 333ZE of the Greater London Authority Act 1999, or
(b) is otherwise made to a relevant provider of social housing (within the meaning of section 35 of the Housing and Regeneration Act 2008) in respect of discounts given by the provider on disposals of dwellings to tenants,
does not count as part of the chargeable consideration for a right to buy transaction to which the vendor is a relevant provider of social housing.
Shared ownership lease: election for market value treatment
2 (1) This paragraph applies where—
(a) a lease is granted—
(i) by a qualifying body, or
(ii) in pursuance of the preserved right to buy,
(b) the conditions in sub-paragraph (2) are met, and
(c) the purchaser elects for tax to be charged in accordance with this paragraph.
(2) The conditions are as follows—
(a) the lease must be of a dwelling;
(b) the lease must give the lessee or lessees exclusive use of the dwelling;
(c) the lease must provide for the lessee or lessees to acquire the reversion;
(d) the lease must be granted partly in consideration of rent and partly in consideration of a premium calculated by reference to—
(i) the market value of the dwelling, or
(ii) a sum calculated by reference to that value;
(e) the lease must contain a statement of—
(i) the market value of the dwelling, or
(ii) the sum calculated by reference to that value,
by reference to which the premium is calculated.
(3) An election for tax to be charged in accordance with this paragraph must be included in the land transaction return made in respect of the grant of the lease, or in an amendment of that return, and is irrevocable, so that the return may not be amended so as to withdraw the election.
(4) Where this paragraph applies the chargeable consideration for the grant of the lease shall be taken to be the amount stated in the lease in accordance with sub-paragraph (2)(e)(i) or (ii).
As to the tax treatment of the acquisition of the reversion in pursuance of the lease, see paragraph 3.
(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).
(5) Section 118 (meaning of “market value”) does not apply in relation to the reference in sub-paragraph (2)(e) above to the market value of the dwelling.
Transfer of reversion under shared ownership lease where election made for market value treatment
3 The transfer of the reversion to the lessee or lessees under the terms of a lease to which paragraph 2 applies (shared ownership lease: election for market value treatment) is exempt from charge if—
(a) an election was made for tax to be charged in accordance with that paragraph, and
(b) any tax chargeable in respect of the grant of the lease has been paid.
Shared ownership lease: election where staircasing allowed
4 (1) This paragraph applies where—
(a) a lease is granted by a qualifying body or in pursuance of the preserved right to buy,
(b) the conditions in sub-paragraph (2) below are met, and
(c) the purchaser elects for tax to be charged in accordance with this paragraph.
(2) The conditions are as follows—
(a) the lease must be of a dwelling;
(b) the lease must give the lessee or lessees exclusive use of the dwelling;
(c) the lease must provide that the lessee or lessees may, on the payment of a sum, require the terms of the lease to be altered so that the rent payable under it is reduced;
(d) the lease must be granted partly in consideration of rent and partly in consideration of a premium calculated by reference to—
(i) the premium obtainable on the open market for the grant of a lease containing the same terms as the lease but with the substitution of the minimum rent for the rent payable under the lease, or
(ii) a sum calculated by reference to that premium;
(e) the lease must contain a statement of the minimum rent and of—
(i) the premium obtainable on the open market, or
(ii) the sum calculated by reference to that premium,
by reference to which the premium is calculated.
(3) An election for tax to be charged in accordance with this paragraph must be included in the land transaction return made in respect of the grant of the lease, or in an amendment of that return, and is irrevocable, so that the return may not be amended so as to withdraw the election.
(4) Where this paragraph applies—
(a) the rent in consideration of which the lease is granted shall be taken to be the minimum rent stated in the lease in accordance with sub-paragraph (2)(e), and
(b) the chargeable consideration for the grant other than rent shall be taken to be the amount stated in the lease in accordance with sub-paragraph (2)(e)(i) or (ii).
(4A) See paragraph 15 for further provision in connection with relief for first-time buyers.
(5) In this paragraph the “minimum rent” means the lowest rent which could become payable under the lease if it were altered as mentioned in sub-paragraph (2)(c) at the date when the lease is granted.
Shared ownership lease: treatment of staircasing transaction
4A (1) This paragraph applies where under a shared ownership lease—
(a) the lessee or lessees have the right, on the payment of a sum, to require the terms of the lease to be altered so that the rent payable under it is reduced, and
(b) by exercising that right the lessee or lessees acquire an interest, additional to one already held, calculated by reference to the market value of the dwelling and expressed as a percentage of the dwelling or its value (a “share of the dwelling”).
(2) Such an acquisition is exempt from charge if—
(a) an election was made for tax to be charged in accordance with paragraph 2 or, as the case may be, paragraph 4 and any tax chargeable in respect of the grant of the lease has been paid, or
(b) immediately after the acquisition the total share of the dwelling held by the lessee or lessees does not exceed 80%.
(3) In this paragraph “shared ownership lease” means a lease granted—
(a) by a qualifying body, or
(b) in pursuance of the preserved right to buy,
in relation to which the conditions in paragraph 2(2) or 4(2) are met.
(4) Section 118 (meaning of “market value”) does not apply in relation to the references in this paragraph to the market value of the dwelling.
Shared ownership lease: grant not linked with staircasing transactions etc
4B (1) For the purpose of determining the amount of tax chargeable on the grant of a shared ownership lease of a dwelling, the grant shall be treated as if it were not linked to—
(a) any acquisition of an interest in the dwelling to which paragraph 4A applies, or
(b) a transfer of the reversion to the lessee or lessees under the terms of the lease.
(2) In this paragraph “shared ownership lease” has the same meaning as in paragraph 4A.
Shared ownership leases: meaning of “qualifying body” and “preserved right to buy”
5 (1) This paragraph has effect for the purposes of paragraphs 2, 4 and 4A (shared ownership leases: election as to basis of taxation).
(2) A “qualifying body” means—
(a) a local housing authority within the meaning of the Housing Act 1985 (c. 68);
(b) a housing association within the meaning of—
(i) the Housing Associations Act 1985 (c. 69), or
(ii) Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I. 15));
(c) a housing action trust established under Part 3 of the Housing Act 1988 (c. 50);
(d) the Northern Ireland Housing Executive;
(e) the Homes and Communities Agency;
(ea) the Greater London Authority so far as exercising its housing or regeneration functions or its new towns and urban development functions;
(f) a development corporation established by an order made, or having effect as if made, under the New Towns Act 1981 (c. 64).
(g) a private registered provider of social housing that is not within paragraph (b) (subject to sub-paragraph (2A)).
(2A) A private registered provider of social housing within sub-paragraph (2)(g) (“R”) is only a qualifying body in relation to a lease of premises if the following has been funded with the assistance of a grant or other financial assistance made or given under section 19 of the Housing and Regeneration Act 2008 or by the Greater London Authority —
(a) the purchase or construction of the premises by R (or a person connected with R), or
(b) the adaptation of the premises by R (or a person connected with R) for use as a dwelling.
(2B) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of sub-paragraph (2A).
(3) A lease is granted “in pursuance of the preserved right to buy” if—
(a) the vendor is a person against whom the right to buy under Part 5 of the Housing Act 1985 is exercisable by virtue of section 171A of that Act (preservation of right to buy on disposal to private sector landlord),
(b) the lessee is, or lessees are, the qualifying person for the purposes of the preserved right to buy, and
(c) the lease is of a dwelling that is the qualifying dwelling-house in relation to the purchaser.
Rent to mortgage or rent to loan: chargeable consideration
6 (1) The chargeable consideration for a rent to mortgage or rent to loan transaction is determined in accordance with this paragraph.
(2) A “rent to mortgage transaction” means—
(a) the transfer of a dwelling to a person, or
(b) the grant of a lease of a dwelling to a person,
pursuant to the exercise by that person of the right to acquire on rent to mortgage terms under Part 5 of the Housing Act 1985 (c. 68).
(3) The chargeable consideration for such a transaction is equal to the price that, by virtue of section 126 of the Housing Act 1985, would be payable for—
(a) a transfer of the dwelling to the person (where the rent to mortgage transaction is a transfer), or
(b) the grant of a lease of the dwelling to the person (where the rent to mortgage transaction is the grant of a lease),
if the person were exercising the right to buy under Part 5 of that Act.
(4) A “rent to loan transaction” means the execution of a heritable disposition in favour of a person pursuant to the exercise by that person of the right to purchase a house by way of the rent to loan scheme in Part 3 of the Housing (Scotland) Act 1987 (c. 26).
(5) The chargeable consideration for such a transaction is equal to the price that, by virtue of section 62 of the Housing (Scotland) Act 1987, would be payable for the house if the person were exercising the right to purchase under section 61 of that Act.
Shared ownership trust: introduction
7 (1) In this Schedule “shared ownership trust” means a trust of land, 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
(b) in England ...
(3) Condition 2 is that one of the beneficiaries (“the social landlord”) is a qualifying body ....
(4) Condition 3 is that the terms of the trust—
(a) provide for one or more of the individual beneficiaries (“the 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 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”),
(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
(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 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 of a dwelling, and
(c) land which is, or is to become, the garden or grounds of a dwelling.
(7) In Condition 2 “qualifying body” means—
(a) a qualifying body within the meaning of paragraph 5(2)(a) to (f), or
(b) a private registered provider of social housing within paragraph 5(2)(g) (subject to sub-paragraph (8)).
(8) A private registered provider of social housing within paragraph 5(2)(g) (“R”) is only a qualifying body in relation to a shared ownership trust if the following has been or is being funded with the assistance of a grant or other financial assistance made or given under section 19 of the Housing and Regeneration Act 2008 or by the Greater London Authority —
(a) the purchase or construction of the trust property by R (or a person connected with R), or
(b) the adaptation of the trust property by R (or a person connected with R) for use as a dwelling.
(9) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of sub-paragraph (8).
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 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 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.
(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
(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
(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 ... payment under a shared ownership trust, and the consequent increase in the purchaser's 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 ... payment under a shared 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
11 Where no election has been made under paragraph 9 in respect of a shared ownership trust—
(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 ... payment by the purchaser shall be treated for the purposes of stamp duty land tax as a payment of rent.
Shared ownership trust: declaration not linked with staircasing transactions etc
12 For the purpose of determining the amount of tax chargeable on the declaration of a shared ownership trust, the declaration shall be treated as if it were not linked to—
(a) any equity-acquisition payment under the trust or any consequent increase in the purchaser's beneficial interest in the trust property, or
(b) a transfer to the purchaser of an interest in the trust property upon the termination of the trust.
Rent to shared ownership lease: charge to tax
13 (1) The chargeable consideration for transactions forming part of a rent to shared ownership lease scheme is determined in accordance with this paragraph.
(2) A “rent to shared ownership lease scheme” means a scheme or arrangement under which a qualifying body—
(a) grants an assured shorthold tenancy assured tenancy of a dwelling to a person (“the tenant”) or persons (“the tenants”), and
(b) subsequently grants a shared ownership lease of the dwelling or another dwelling to the tenant or one or more of the tenants.
(3) The following transactions are to be treated as if they were not linked to each other—
(a) the grant of the assured shorthold tenancy assured tenancy,
(b) the grant of the shared ownership lease, and
(c) any other land transaction between the qualifying body and the tenant, or any of the tenants, entered into as part of the scheme.
(4) For the purpose of determining the effective date of the grant of the shared ownership lease, the possession of the dwelling by the tenant or tenants pursuant to the assured shorthold tenancy assured tenancy is to be disregarded.
(5) In this paragraph—
“assured shorthold tenancy assured tenancy” has the same meaning as in Part 1 of the Housing Act 1988;
“qualifying body” has the same meaning as in paragraph 5;
“shared ownership lease” has the same meaning as in paragraph 4A.
Rent to shared ownership trust: charge to tax
14 (1) The chargeable consideration for transactions forming part of a rent to shared ownership trust scheme is determined in accordance with this paragraph.
(2) A “rent to shared ownership trust scheme” means a scheme or arrangement under which—
(a) a qualifying body grants an assured shorthold tenancy assured tenancy of a dwelling to a person (“the tenant”) or persons (“the tenants”), and
(b) the tenant, or one or more of tenants, subsequently becomes the purchaser under a shared ownership trust of the dwelling, or another dwelling, under which the qualifying body is the social landlord.
(3) The following transactions are to be treated as if they were not linked to each other—
(a) the grant of the assured shorthold tenancy assured tenancy,
(b) the declaration of the shared ownership trust, and
(c) any other land transaction between the qualifying body and the tenant, or any of the tenants, entered into as part of the scheme.
(4) For the purpose of determining the effective date of the declaration of the shared ownership trust, the possession of the dwelling by the tenant or tenants pursuant to the assured shorthold tenancy assured tenancy is to be disregarded.
(5) In this paragraph—
“assured shorthold tenancy assured tenancy” has the same meaning as in Part 1 of the Housing Act 1988;
“qualifying body” has the same meaning as in paragraph 5;
“social landlord” and “purchaser”, in relation to a shared ownership trust, have the same meaning as in paragraph 7.
Relief for first-time buyers: shared ownership lease where election made
15 Where—
(a) paragraph 4 applies, and
(b) relief is claimed under paragraph 1 of Schedule 6ZA in respect of the grant of the lease concerned,
no tax is chargeable in respect of so much of the chargeable consideration for the grant as consists of rent.
Relief for first-time buyers: shared ownership lease where no election made
15A (1) This paragraph applies where—
(a) a shared ownership lease is granted, and
(b) no election is made for tax to be charged in accordance with paragraph 2 or 4.
(2) For the purpose of determining whether the second condition in paragraph 1 of Schedule 6ZA is met in respect of the grant, the chargeable consideration for the grant is to be treated as being the amount stated in the lease in accordance with paragraph 2(2)(e) or paragraph 4(2)(e)(i) or (ii).
(3) If relief is claimed in respect of the grant under paragraph 1 of Schedule 6ZA no tax is chargeable in respect of so much of the chargeable consideration for the grant as consists of rent.
(4) In this paragraph “shared ownership lease” has the same meaning as in paragraph 4A.
Relief for first-time buyers: shared ownership trust where no election made
15B (1) This paragraph applies where—
(a) a shared ownership trust is declared, and
(b) no election is made for tax to be charged in accordance with paragraph 9.
(2) For the purpose of determining whether the second condition in paragraph 1 of Schedule 6ZA is met in respect of the declaration, the chargeable consideration for the declaration is to be treated as being the sum specified in the trust in accordance with paragraph 7(4)(f).
(3) If relief is claimed in respect of the declaration under paragraph 1 of Schedule 6ZA no tax is chargeable in respect of any rent-equivalent payment treated by reason of paragraph 11(b) as rent.
No relief for first-time buyers for staircasing transactions etc
16 (1) This paragraph applies where—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) paragraph 4A applies in relation to the acquisition of an interest (but the acquisition is not exempt from charge by virtue of sub-paragraph (2) of that paragraph),
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or
(e) an equity-acquisition payment is made under a shared ownership trust (but the equity-acquisition payment, and the consequential increase in the purchaser's beneficial interest, are not exempt from charge by virtue of paragraph 10).
(2) Schedule 6ZA (relief for first-time buyers) does not apply in relation to—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) the acquisition of the interest,
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or
(d) the equity-acquisition payment and the consequential increase in the purchaser's beneficial interest.
SCHEDULE 9A Increased rates for non-resident transactions
Section 75ZA
PART 1 Introduction
1 This Schedule is arranged as follows—
(a) Part 2 explains how to determine for the purposes of this Part of this Act whether a chargeable transaction is a “non-resident transaction”;
(b) Part 3 explains how to determine for the purposes of this Schedule whether an individual is “non-resident” in relation to a chargeable transaction;
(c) Part 4 explains how to determine for the purposes of this Schedule whether a company is “non-resident” in relation to a chargeable transaction;
(d) Part 5 contains special rules applying in relation to particular purchasers and transactions;
(e) Part 6 contains supplementary provision.
PART 2 Meaning of “non-resident transaction”
Meaning of “non-resident transaction”
2 (1) A chargeable transaction is a “non-resident transaction” for the purposes of this Part of this Act if—
(a) the purchaser is, or (if there is more than one) the purchasers include, a person who is non-resident in relation to the transaction,
(b) the main subject-matter of the transaction consists of—
(i) a major interest in one or more dwellings, or
(ii) a major interest in one or more dwellings and other property,
(c) that major interest, at the beginning of the effective date of the transaction, is not a term of years absolute or leasehold estate that has 7 years or less to run, and
(d) the de minimis threshold is exceeded.
(2) A reference in sub-paragraph (1)(b) or (c) to a major interest in a dwelling includes an undivided share in a major interest in a dwelling.
(3) For the purposes of sub-paragraph (1)(d), the de minimis threshold is exceeded if—
(a) in a case in which the chargeable consideration for the transaction does not consist of or include rent, the chargeable consideration for the transaction is £40,000 or more;
(b) in a case in which the chargeable consideration for the transaction consists of or includes rent—
(i) the chargeable consideration other than rent is £40,000 or more, or
(ii) the annual rent is £1,000 or more.
(4) In sub-paragraph (3) “annual rent” in relation to a transaction, means the average annual rent over the term of the lease to which the transaction relates or, if—
(a) different amounts of rents are payable for different parts of the term, and
(b) those amounts (or any of them) are ascertainable at the effective date of the transaction,
the average annual rent over the period for which the highest ascertainable rent is payable.
(5) For provision modifying sub-paragraph (1)(a) in its application to chargeable transactions of particular descriptions, see—
paragraph 13 (bare trust acquiring new lease);
paragraph 14 (purchases by certain settlements).
(6) Sub-paragraph (1) is subject to paragraph 17 (completion of contract previously substantially performed).
PART 3 “Non-resident” in relation to a chargeable transaction: individuals
Whether individual “non-resident” in relation to a chargeable transaction
3 For the purposes of this Schedule, an individual is “non-resident” in relation to a chargeable transaction if the individual is not UK resident in relation to the transaction (see paragraphs 4 and 5).
Whether individual “UK resident” in relation to a chargeable transaction: basic rule
4 (1) For the purposes of this Schedule, an individual is “UK resident” in relation to a chargeable transaction if the individual is present in the United Kingdom on at least 183 days during any continuous period of 365 days that falls within the relevant period.
(2) “The relevant period” means the period that—
(a) begins with the day 364 days before the effective date of the chargeable transaction, and
(b) ends with the day 365 days after the effective date of the chargeable transaction.
(3) This paragraph does not apply in relation to a chargeable transaction to which paragraph 5 applies.
(4) References in this paragraph to an individual being present in the United Kingdom on a day are to the individual being present in the United Kingdom at the end of that day.
(5) This paragraph is subject to paragraph 12 (spouses and civil partners of UK residents).
Whether individual “UK resident” in relation to a chargeable transaction: special cases
5 (1) For the purposes of this Schedule, an individual is “UK resident” in relation to a chargeable transaction to which this paragraph applies if the individual is present in the United Kingdom on at least 183 days during the period that—
(a) begins with the day 364 days before the effective date of the chargeable transaction, and
(b) ends with the effective date of the chargeable transaction.
(2) This paragraph applies to a chargeable transaction if any of conditions A to C is met in relation to the transaction.
(3) Condition A is that the purchaser is, or (if there is more than one) the purchasers include—
(a) a company, or
(b) a person acting as a trustee of a unit trust scheme.
(4) Condition B is that the purchaser is, or (if there is more than one) the purchasers include, an individual who is treated as entering into the transaction by virtue of paragraph 2 of Schedule 15 (transaction entered into for the purposes of a partnership treated as entered into by partners).
(5) Condition C is that—
(a) the purchaser is, or (if there is more than one) the purchasers include, an individual who is acting as a trustee of a settlement, and
(b) under the terms of the settlement no beneficiary is entitled—
(i) to occupy the dwelling or dwellings for life, or
(ii) to income earned in respect of the dwelling or dwellings.
(6) References in this paragraph to an individual being present in the United Kingdom on a day are to the individual being present in the United Kingdom at the end of that day.
(7) This paragraph is subject to paragraph 12 (spouses and civil partners of UK residents).
Crown employment
6 (1) For the purposes of paragraphs 4 and 5, an individual is (subject to sub-paragraph (3)) treated as present in the United Kingdom at the end of a day if at that time the individual—
(a) is in Crown employment, and
(b) is present in a country or territory outside the United Kingdom for the purpose of performing activities in the course of that employment.
(2) For the purposes of paragraphs 4 and 5, an individual is (subject to sub-paragraph (3)) treated as present in the United Kingdom at the end of a day if at that time the individual—
(a) is the spouse or civil partner of an individual who is treated as present in the United Kingdom at the end of that day under sub-paragraph (1), and
(b) is living with that spouse or civil partner.
(3) Sub-paragraph (1) or (2) applies in relation to an individual only if a claim that it should so apply is included in a land transaction return or an amendment of such a return.
(4) “Crown employment” means employment under the Crown—
(a) which is of a public nature, and
(b) the earnings from which are payable out of the public revenue of the United Kingdom or of Northern Ireland.
(5) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.
PART 4 “Non-resident” in relation to a chargeable transaction: companies
Whether company is “non-resident” in relation to a chargeable transaction
7 (1) For the purposes of this Schedule a company is “non-resident” in relation to a chargeable transaction if either of the following conditions is met.
(2) The first condition is that, on the effective date of the chargeable transaction, the company is not UK resident for the purposes of the Corporation Tax Acts (see Chapter 3 of Part 2 of CTA 2009).
(3) The second condition is that, on the effective date of the chargeable transaction, the company (though UK resident for the purposes of the Corporation Tax Acts)—
(a) is a close company (see paragraph 8),
(b) meets the non-UK control test in relation to the transaction (see paragraphs 9 and 10), and
(c) is not an excluded company (see paragraph 11).
(4) This paragraph is subject to—
(a) paragraph 15 (co-ownership ... contractual schemes);
(b) paragraph 16 (alternative property finance).
Meaning of “close company”
8 (1) For the purposes of this Schedule, a company is a “close company” if it is a close company within the meaning given by Chapter 2 of Part 10 of CTA 2010 (basic definitions), applying that Chapter subject to the following modifications.
(2) Section 444 (companies involved with close companies) applies as if condition A in that section were omitted.
(3) Section 446 (particular types of quoted company not treated as close) is treated as omitted.
Non-UK control
9 (1) For the purposes of this Schedule, a company meets the “non-UK control test” in relation to a chargeable transaction if it is a close company within the meaning given by Chapter 2 of Part 10 of CTA 2010 (basic definitions), applying that Chapter subject to the following modifications.
(2) Section 439 (“close company”) applies as if—
(a) references to a participator were to a relevant participator, and
(b) references to five or fewer participators were to any number of relevant participators.
(3) In sub-paragraph (2), “relevant participator” means a participator (within the meaning given by Chapter 2 of Part 10 of CTA 2010) who—
(a) is non-resident in relation to the chargeable transaction (within the meaning of this Schedule), and
(b) is not a general partner in a limited partnership.
(4) Section 444 (companies involved with close companies) applies as if condition A in that section were omitted.
(5) Section 446 (particular types of quoted company not treated as close) is treated as omitted.
(6) Section 451 (attribution of rights and powers) has effect subject to the limitations set out in paragraph 10.
(7) The reference in sub-paragraph (3)(b) to a general partner does not include a general partner who possesses, or is entitled to acquire, rights that entitle the general partner, in the event of the winding up of the company or in any other circumstances, to receive more than 1% of the assets of the company which would then be available for distribution among its members.
Non-UK control: attribution of rights and powers
10 (1) This paragraph sets out limitations on the rights and powers of a person (A) that, apart from this paragraph, would be capable of being attributed to another person (B) under section 451(4) of CTA 2010, as that provision applies for the purposes of paragraph 9(1).
(2) Where A and B are partners in a partnership, no rights and powers of A may be attributed to B under paragraph (c) or (d) of section 451(4) of CTA 2010 by virtue of that fact.
(3) Where—
(a) A and B are spouses or civil partners of each other,
(b) A and B are living together, and
(c) A is UK resident in relation to the chargeable transaction,
no rights and powers of A may be attributed to B under paragraph (c) or (d) of section 451(4) of CTA 2010 by virtue of the fact mentioned in paragraph (a).
(4) Where A’s or B’s interest in a company is de minimis, no rights and powers of A in relation to the company may be attributed to B under any of paragraphs (a) to (d) of section 451(4) of CTA 2010.
(5) For this purpose, a person’s interest in a company is “de minimis” if—
(a) the proportion of the share capital or issued share capital in the company that the person possesses or is entitled to acquire is less than 5%,
(b) the proportion of the voting rights in the company that the person possesses or is entitled to acquire is less than 5%,
(c) the issued share capital in the company that the person possesses or is entitled to acquire would, on the assumption that the whole of the income of the company were distributed among the participators, entitle the person to receive less than 5% of the income so distributed, and
(d) the person’s rights in the company entitle the person, in the event of the winding up of the company or in any other circumstances, to less than 5% of the assets of the company which would then be available for distribution among the participators.
(6) Any rights A has as a loan creditor are to be disregarded for the purposes of the assumption in sub-paragraph (5)(c).
(7) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.
Excluded companies
11 (1) A company is an “excluded company” for the purposes of paragraph 7(3)(c) if it is any of the following—
(a) a PAIF;
(b) a body corporate that is a 51% subsidiary of PAIF;
(c) a company UK REIT;
(d) a company that is a member of a group UK REIT;
(e) a company acting as a trustee of a settlement.
(2) In this paragraph—
(a) “PAIF” means a body corporate that is a property AIF for the purposes of Schedule 7A to this Act by virtue of paragraph 2(2) of that Schedule;
(b) “51% subsidiary” has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of CTA 2010);
(c) “company UK REIT” has the same meaning as in Part 12 of CTA 2010 (see section 524(5) of that Act);
(d) “group UK REIT” has the same meaning as in Part 12 of CTA 2010 (see section 523(5) of that Act).
PART 5 Special rules for particular purchasers and transactions
Spouses and civil partners of UK residents
12 (1) This paragraph applies where—
(a) there are two or more purchasers in relation to a chargeable transaction who are or will be jointly entitled to the interest acquired, and
(b) the following conditions are met in relation to those purchasers.
(2) The conditions are—
(a) that, on the effective date of the transaction, the purchasers, or (if there are more than two) two of them, are spouses or civil partners of each other;
(b) that, on the effective date of the transaction, those spouses or civil partners are living together;
(c) that one of those spouses or civil partners is UK resident in relation to the chargeable transaction;
(d) that (apart from this paragraph) one of those spouses or civil partners is non-resident in relation to the chargeable transaction;
(e) that neither of the spouses or civil partners is acting as a trustee of a settlement.
(3) For the purposes of this Schedule, the spouse or civil partner mentioned in sub-paragraph (2)(d) is UK resident in relation to the chargeable transaction.
(4) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.
Bare trust acquiring new lease
13 (1) Sub-paragraph (2) applies to a chargeable transaction if—
(a) the purchaser is, or (if there is more than one) the purchasers include, a person (P) who is acting as a trustee of a bare trust, and
(b) paragraph 3(3) of Schedule 16 (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) applies in relation to P.
(2) In determining for the purposes of this Part of this Act whether the chargeable transaction is a “non-resident transaction”, paragraph 2(1)(a) (condition that purchaser be non-resident) has effect as if a reference to the purchaser or purchasers—
(a) included the beneficiary or beneficiaries of the bare trust, and
(b) did not include P.
Purchase by settlement if beneficiary entitled to occupy, or to income from, dwelling
14 (1) Sub-paragraph (2) applies to a chargeable transaction if—
(a) the purchaser is, or (if there is more than one) the purchasers include, a person (P) who is acting as a trustee of a settlement, and
(b) under the terms of the settlement a beneficiary is entitled—
(i) to occupy the dwelling or dwellings for life, or
(ii) to income earned in respect of the dwelling or dwellings.
(2) In determining for the purposes of this Part of this Act whether the chargeable transaction is a “non-resident transaction”, paragraph 2(1)(a) (condition that purchaser be non-resident) has effect as if a reference to the purchaser or purchasers—
(a) included the beneficiary or beneficiaries of the settlement, and
(b) did not include P.
(3) In this paragraph “settlement” does not include a settlement under a unit trust scheme.
Co-ownership ... contractual schemes
15 (1) Subject to sub-paragraph (2), a co-ownership authorised contractual scheme is not “non-resident” in relation to any chargeable transaction.
(2) A collective investment scheme that is a co-ownership authorised contractual scheme by virtue of section 102A(7) (EEA schemes) is “non-resident” in relation to all chargeable transactions.
(3) A Reserved Investor Fund (Contractual Scheme) is not “non-resident” in relation to any chargeable transaction.
Alternative property finance
16 (1) Sub-paragraph (2) applies in relation to a chargeable transaction within section 71A(1)(a) (purchase of land by financial institution as part of alternative property finance arrangements).
(2) The financial institution that enters into the transaction is “non-resident” in relation to the transaction if and only if the person with whom it enters into the arrangements mentioned in section 71A(1) is non-resident in relation to the transaction.
(3) Sub-paragraph (4) applies in relation to a chargeable transaction within section 73(1)(a)(i) (purchase of land by financial institution as part of alternative property finance arrangements).
(4) The financial institution that enters into the transaction is “non-resident” in relation to the transaction if and only if the person with whom it enters into the arrangements mentioned in section 73(1) is non-resident in relation to the transaction.
Completion of contract previously substantially performed
17 In a case within section 44(8) (contract substantially performed and subsequently completed by a conveyance) the later of the notifiable transactions mentioned in that provision is a “non-resident transaction” for the purposes of this Part if and only if the earlier of those notifiable transactions is a non-resident transaction for the purposes of this Part.
PART 6 Supplementary provision
Completion of land transaction return
18 (1) Sub-paragraph (2) applies in relation to a land transaction return in respect of a chargeable transaction if—
(a) in order to determine whether the chargeable transaction is a non-resident transaction, it is necessary to determine whether one or more individuals are UK resident in relation to the transaction under paragraph 4(1), and
(b) that individual or any of those individuals, at the beginning of the day on which the land transaction return is delivered, has not yet met the condition in that provision (but might turn out to do so depending on their residence during the remainder of the relevant period).
(2) The land transaction return must be prepared on the assumption that the individual or (as the case may be) each of the individuals is resident outside the United Kingdom throughout the period—
(a) beginning with the day on which the land transaction return is delivered, and
(b) ending at the end of the relevant period.
(3) In this paragraph “the relevant period” has the same meaning as in paragraph 4(1).
Amendment of return where individual becomes UK resident after return delivered
19 (1) Sub-paragraph (2) applies where—
(a) a land transaction return in respect of a chargeable transaction is prepared on the assumption mentioned in paragraph 18(2), and
(b) the individual or (as the case may be) each of the individuals in respect of whom the assumption was made subsequently meets the condition in paragraph 4(1) (with the result that the transaction is not a non-resident transaction).
(2) The land transaction return may be amended, at any time before the end of the period of 2 years beginning with the day after the effective date of the transaction, to take account of the fact that the transaction is not a non-resident transaction.
(3) Where a land transaction return is amended under sub-paragraph (2), paragraph 6(2A) of Schedule 10 (notice of amendment of return to be accompanied by the contract for the transaction etc) does not apply in relation to the amendment.
What counts as a dwelling
20 (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
(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 that land) is taken to be part of that dwelling.
(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 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 use as a single dwelling, and
(c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed.
(6) In sub-paragraph (5)—
“contract” includes any agreement;
“relevant deeming provision” means any of sections 44 to 45A or paragraph 5(1) or (2) of Schedule 2A or paragraph 12A of Schedule 17A;
“substantially performed” has the same meaning as in section 44.
(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).
(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.
Interpretation
21 In this Schedule—
“CTA 2009” means the Corporation Tax Act 2009;
“CTA 2010” means the Corporation Tax Act 2010.
Power to modify this Schedule
22 (1) The Treasury may by regulations amend or otherwise modify this Schedule for the purpose of preventing certain chargeable transactions from being non-resident transactions for the purposes of this Schedule.
(2) The provision which may be included in regulations under this paragraph by reason of section 114(6)(c) includes incidental or consequential provision which may cause a chargeable transaction to be a non-resident transaction for the purposes of this Schedule.
SCHEDULE 10 Stamp duty land tax: returns, enquiries, assessments and appeals
Section 78
Part 1 Land transaction returns
Contents of return
1 (1) A land transaction return must—
(a) be in the prescribed form,
(b) contain the prescribed information, and
(c) include a declaration by the purchaser (or each of them) that the return is to the best of his knowledge correct and complete.
(1A) Sub-paragraph (1)(c) is subject to paragraphs 1A and 1B.
(2) In sub-paragraph (1) “prescribed” means prescribed by regulations made by the Inland Revenue.
(3) The regulations may make different provision for different kinds of return.
(4) Regulations under sub-paragraph (1)(b) may require the provision of information corresponding to any of the particulars formerly required under—
(a) Schedule 2 to the Finance Act 1931 (c. 28) (requirement to deliver particulars of land transactions in Great Britain), or
(b) section 244 of the Finance Act 1994 (c. 9) (corresponding provision for Northern Ireland).
(5) The return is treated as containing any information provided by the purchaser for the purpose of completing the return.
Declaration by agent
1A. (1) Where —
(a) the purchaser (or each of them) authorises an agent to complete a land transaction return,
(b) the purchaser (or each of them) makes a declaration that, with the exception of the effective date, the information provided in the return is to the best of his knowledge correct and complete, and
(c) the land transaction return includes a declaration by the agent that the effective date provided in the return is to the best of his knowledge correct,
the requirement in paragraph 1(1)(c) shall be deemed to be met.
(2) Sub-paragraph (1) applies only where the return is in a form specified by the Inland Revenue 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
1B. (1) 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
(c) the land transaction return includes a declaration by the Official Solicitor that the return is to the best of his knowledge correct and complete,
the requirement in paragraph 1(1)(c) shall be deemed to be met.
(2) Sub-paragraph (1) applies only where the return is in a form specified by the Inland Revenue 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.
(4) In this paragraph “the Official Solicitor” means the Official Solicitor to the Supreme Court of England and Wales or the Official Solicitor to the Supreme Court of Northern Ireland (as the case requires).
Meaning of filing date and delivery of return
2 (1) References in this Part of this Act to the filing date, in relation to a land transaction return, are to the last day of the period within which the return must be delivered.
(2) References in this Part of this Act to the delivery of a land transaction return are to the delivery of a return that—
(a) complies with the requirements of paragraph 1(1) (contents of return), ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Failure to deliver return: flat-rate penalty
3 (1) A person who is required to deliver a land transaction return and fails to do so by the filing date is liable to a flat-rate penalty under this paragraph.
He may also be liable to a tax-related penalty under paragraph 4.
(2) The penalty is—
(a) £100 if the return is delivered within three months after the filing date, and
(b) £200 in any other case.
Failure to deliver return: tax-related penalty
4 (1) A purchaser who is required to deliver a land transaction return in respect of a chargeable transaction and fails to do so within twelve months after the filing date is liable to a tax-related penalty under this paragraph.
This is in addition to any flat-rate penalty under paragraph 3.
(2) The penalty is an amount not exceeding the amount of tax chargeable in respect of the transaction.
Formal notice to deliver return: daily penalty
5 (1) If it appears to the Inland Revenue—
(a) that a purchaser required to deliver a land transaction return in respect of a chargeable transaction has failed to do so, and
(b) that the filing date has now passed,
they may issue a notice requiring him to deliver a land transaction return in respect of the transaction.
(2) The notice must specify—
(a) the transaction to which it relates, and
(b) the period for complying with the notice (which must not be less than 30 days from the date of issue of the notice).
(3) If the purchaser does not comply with the notice within the specified period, the Inland Revenue may apply to the tribunal for an order imposing a daily penalty.
(4) On such an application the tribunal may direct that the purchaser shall be liable to a penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction.
(5) This paragraph does not affect, and is not affected by, any penalty under paragraph 3 or 4 (flat-rate or tax-related penalty for failure to deliver return).
Amendment of return by purchaser
6 (1) The purchaser may amend a land transaction return given by him by notice to the Inland Revenue.
(2) The notice must be in such form, and contain such information, as the Inland Revenue may require.
(2A) If the effect of the amendment would be to entitle the purchaser to a repayment of tax, the notice must be accompanied by—
(a) the contract for the land transaction; and
(b) the instrument (if any) by which that transaction was effected.
(3) Except as otherwise provided, an amendment may not be made more than twelve months after the filing date.
Correction of return by Revenue
7 (1) The Inland Revenue may amend a land transaction return so as to correct obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise).
(1A) The power under sub-paragraph (1) may, in such circumstances as the Commissioners for Her Majesty's Revenue and Customs may specify in regulations, be exercised—
(a) in relation to England and Wales, by the Chief Land Registrar;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) in relation to Northern Ireland, by the Registrar of Titles or the registrar of deeds;
(d) in any case, by such other persons with functions relating to the registration of land as the regulations may specify.
(2) A correction under this paragraph is made by notice to the purchaser.
(3) No such correction may be made more than nine months after—
(a) the day on which the return was delivered, or
(b) if the correction is required in consequence of an amendment under paragraph 6, the day on which that amendment was made.
(4) A correction under this paragraph is of no effect if the purchaser—
(a) amends the return so as to reject the correction, or
(b) after the end of the period within which he may amend the return, but within three months from the date of issue of the notice of correction, gives notice rejecting the correction.
(5) Notice under sub-paragraph (4)(b) must be given to the officer of the Board by whom notice of the correction was given.
Penalty for incorrect or uncorrected return
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part 2 Duty to keep and preserve records
Duty to keep and preserve records
9 (1) A purchaser who is required to deliver a land transaction return must—
(a) keep such records as may be needed to enable him to deliver a correct and complete return, and
(b) preserve those records in accordance with this paragraph.
(2) The records must be preserved until the end of the later of the relevant day and the date on which—
(a) an enquiry into the return is completed, or
(b) if there is no enquiry, the Inland Revenue no longer have power to enquire into the return.
(2A) “The relevant day” means—
(a) the sixth anniversary of the effective date of the transaction, or
(b) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).
(3) The records required to be kept and preserved under this paragraph include—
(a) relevant instruments relating to the transaction, in particular, any contract or conveyance, and any supporting maps, plans or similar documents;
(b) records of relevant payments, receipts and financial arrangements.
(4) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents so specified.
(5) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(6) “Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.
Preservation of information etc
10 The duty under paragraph 9 to preserve records may be satisfied—
(a) by preserving them in any form and by any means, or
(b) by preserving the information contained in them in any form and by any means,
subject to any conditions or exceptions specified in writing by the Commissioners for Her Majesty's Revenue and Customs.
Penalty for failure to keep and preserve records
11 (1) A person who fails to comply with paragraph 9 in relation to a transaction is liable to a penalty not exceeding £3,000, subject to the following exception.
(2) No penalty is incurred if the Inland Revenue are satisfied that any facts that they reasonably require to be proved, and that would have been proved by the records, are proved by other documentary evidence provided to them.
Part 3 Enquiry into return
Notice of enquiry
12 (1) The Inland Revenue may enquire into a land transaction return if they give notice of their intention to do so (“notice of enquiry”)—
(a) to the purchaser,
(b) before the end of the enquiry period.
(2) The enquiry period is the period of nine months—
(a) after the filing date, if the return was delivered on or before that date;
(b) after the date on which the return was delivered, if the return was delivered after the filing date;
(c) after the date on which the amendment was made, if the return is amended under paragraph 6 (amendment by purchaser).
This is subject to the following qualification.
(2A) If—
(a) the Inland Revenue give notice, within the period specified in sub-paragraph (2), of their intention to enquire into a land transaction return delivered under section 80 (adjustment where contingency ceases or consideration is ascertained), 81 (further return where relief withdrawn) or 81A (return or further return in consequence of later linked transaction) ..., and
(b) it appears to the Inland Revenue to be necessary to give a notice under this paragraph in respect of an earlier land transaction return ...,
a notice may be given notwithstanding that the period referred to in sub-paragraph (2) has elapsed in relation to that earlier return.
(3) A return that has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) of the return under paragraph 6.
Scope of enquiry
13 (1) An enquiry extends to anything contained in the return, or required to be contained in the return, that relates—
(a) to the question whether tax is chargeable in respect of the transaction, or
(b) to the amount of tax so chargeable.
This is subject to the following exception.
(2) If the notice of enquiry is given as a result of an amendment of the return under paragraph 6 (amendment by purchaser)—
(a) at a time when it is no longer possible to give notice of enquiry under paragraph 12, or
(b) after an enquiry into the return has been completed,
the enquiry into the return is limited to matters to which the amendment relates or that are affected by the amendment.
Notice to produce documents etc for purposes of enquiry
Appeal against notice to produce documents etc
Penalty for failure to produce documents etc
Amendment of self-assessment during enquiry to prevent loss of tax
17 (1) If at a time when an enquiry is in progress into a land transaction return the Inland Revenue form the opinion—
(a) that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and
(b) that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,
they may by notice in writing to the purchaser amend the assessment to make good the deficiency.
(2) In the case of an enquiry that under paragraph 13(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above applies only so far as the deficiency is attributable to the amendment.
(3) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which the enquiry is completed.
Amendment of return by taxpayer during enquiry
18 (1) This paragraph applies if a return is amended under paragraph 6 (amendment by purchaser) at a time when an enquiry is in progress into the return.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects the amount stated in the self-assessment included in the return as the amount of tax payable, it does not take effect while the enquiry is in progress and—
(a) if the Inland Revenue state in the closure notice that they have taken the amendments into account and that—
(i) the amendment has been taken into account in formulating the amendments contained in the notice, or
(ii) their conclusion is that the amendment is incorrect,
the amendment shall not take effect;
(b) otherwise, the amendment takes effect when the closure notice is issued.
(4) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which the enquiry is completed.
Referral of questions to the tribunal during enquiry
19 (1) At any time when an enquiry is in progress into a land transaction return any question arising in connection with the subject-matter of the enquiry may be referred to the tribunal for determination.
(2) Notice of referral must be given—
(a) jointly by the purchaser and the Inland Revenue,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) to the tribunal.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) More than one notice of referral may be given under this paragraph in relation to an enquiry.
(5) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which the notice of enquiry was given, and
(b) ending with the day on which the enquiry is completed.
Withdrawal of notice of referral
20 (1) The Inland Revenue or the purchaser may withdraw a notice of referral under paragraph 19 ....
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of referral on enquiry
21 (1) While proceedings on a referral under paragraph 19 are in progress in relation to an enquiry—
(a) no closure notice shall be given in relation to the enquiry, and
(b) no application may be made for a direction to give such a notice.
(2) For the purposes of this paragraph proceedings on a referral are in progress where—
(a) notice of referral has been given,
(b) the notice has not been withdrawn, and
(c) the questions referred have not been finally determined.
(3) For the purposes of sub-paragraph (2)(c) a question referred is finally determined when—
(a) it has been determined by the tribunal, and
(b) there is no further possibility of the determination being varied or set aside (disregarding any power to grant permission to appeal out of time).
Effect of determination
22 (1) The determination of a question referred to the tribunal under paragraph 19 is binding on the parties to the referral in the same way, and to the same extent, as a decision on a preliminary issue in an appeal.
(2) The determination shall be taken into account by the Inland Revenue—
(a) in reaching their conclusions on the enquiry, and
(b) in formulating any amendments of the return required to give effect to those conclusions.
(3) Any right of appeal under paragraph 35 (appeals against assessments etc) may not be exercised so as to reopen the question determined except to the extent (if any) that it could be reopened if it had been determined as a preliminary issue in that appeal.
Completion of enquiry
23 (1) An enquiry under paragraph 12 is completed when the Inland Revenue by notice (a “closure notice”) inform the purchaser that they have completed their enquiries and state their conclusions.
(2) A closure notice must either—
(a) state that in the opinion of the Inland Revenue no amendment of the return is required, or
(b) make the amendments of the return required to give effect to their conclusions.
(3) A closure notice takes effect when it is issued.
Direction to complete enquiry
24 (1) The purchaser may apply to the tribunal for a direction that the Inland Revenue give a closure notice within a specified period.
(2) Any such application is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).
(3) The tribunal hearing the application shall give a direction unless ... satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.
Part 4 Revenue determination if no return delivered
Determination of tax chargeable if no return delivered
25 (1) If in the case of a chargeable transaction no land transaction return is delivered by the filing date, the Inland Revenue may make a determination (a “Revenue determination”) to the best of their information and belief of the amount of tax chargeable in respect of the transaction.
(2) Notice of the determination must be served on the purchaser, stating the date on which it is issued.
(3) No Revenue determination may be made more than 4 years after the effective date of the transaction.
Determination to have effect as a self-assessment
26 (1) A Revenue determination has effect for enforcement purposes as if were a self-assessment by the purchaser.
(2) In sub-paragraph (1) “for enforcement purposes” means for the purposes of the following provisions of this Part of this Act—
(a) the provisions of this Schedule providing for tax-related penalties;
(b) section 87 (interest on unpaid tax);
(c) section 91 and Schedule 12 (collection and recovery of unpaid tax etc).
(3) Nothing in this paragraph affects any liability of the purchaser to a penalty for failure to deliver a return.
Determination superseded by actual self-assessment
27 (1) If after a Revenue determination has been made the purchaser delivers a land transaction return in respect of the transaction, the self-assessment included in that return supersedes the determination.
(2) Sub-paragraph (1) does not apply to a return delivered—
(a) more than 4 years after the day on which the power to make the determination first became exercisable, or
(b) more than twelve months after the date of the determination,
whichever is the later.
(3) Where—
(a) proceedings have been begun for the recovery of any tax charged by a Revenue determination, and
(b) before the proceedings are concluded the determination is superseded by a self-assessment,
the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.
(4) Where—
(a) action is being taken under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement of deduction from accounts) for the recovery of an amount (“the original amount”) of tax charged by a Revenue determination, and
(b) before that action is concluded, the determination is superseded by a self-assessment,
that action may be continued as if it were action for the purposes of the recovery of so much of the tax charged by the self-assessment as is due and payable, has not yet been paid and does not exceed the original amount.
Part 5 Revenue assessments
Assessment where loss of tax discovered
28 (1) If the Inland Revenue discover as regards a chargeable transaction that—
(a) an amount of tax that ought to have been assessed has not been assessed, or
(b) an assessment to tax is or has become insufficient, or
(c) relief has been given that is or has become excessive,
they may make an assessment (a “discovery assessment”) in the amount or further amount that ought in their opinion to be charged in order to make good to the Crown the loss of tax.
(2) The power to make a discovery assessment in respect of a transaction for which the purchaser has delivered a return is subject to the restrictions specified in paragraph 30.
Assessment to recover excessive repayment of tax
29 (1) If an amount of tax has been repaid to any person that ought not to have been repaid to him, that amount may be assessed and recovered as if it were unpaid tax.
(2) Where the repayment was made with interest, the amount assessed and recovered may include the amount of interest that ought not to have been paid.
(3) The power to make an assessment under this paragraph in respect of a transaction for which the purchaser has delivered a land transaction return is subject to the restrictions specified in paragraph 30.
Restrictions on assessment where return delivered
30 (1) If the purchaser has delivered a land transaction return in respect of the transaction in question, an assessment under paragraph 28 or 29 in respect of the transaction—
(a) may only be made in the two cases specified in sub-paragraphs (2) and (3) below, and
(b) may not be made in the circumstances specified in sub-paragraph (5) below.
(2) The first case is where the situation mentioned in paragraph 28(1) or 29(1) is attributable to fraudulent or negligent conduct on the part of—
(a) the purchaser,
(b) a person acting on behalf of the purchaser, or
(c) a person who was a partner of the purchaser at the relevant time.
(3) The second case is where the Inland Revenue, at the time they—
(a) ceased to be entitled to give a notice of enquiry into the return, or
(b) completed their enquiries into the return,
could not have been reasonably expected, on the basis of the information made available to them before that time, to be aware of the situation mentioned in paragraph 28(1) or 29(1).
(4) For this purpose information is regarded as made available to the Inland Revenue if—
(a) it is contained in a land transaction return made by the purchaser,
(b) it is contained in any documents produced or information provided to the Inland Revenue for the purposes of an enquiry into any such return, or
(c) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 28(1) or 29(1)—
(i) could reasonably be expected to be inferred by the Inland Revenue from information falling within paragraphs (a) or (b) above, or
(ii) are notified in writing to the Inland Revenue by the purchaser or a person acting on his behalf.
(5) No assessment may be made if—
(a) the situation mentioned in paragraph 28(1) or 29(1) is attributable to a mistake in the return as to the basis on which the tax liability ought to have been computed, and
(b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time it was made.
Time limit for assessment
31 (1) The general rule is that no assessment may be made more than 4 years after the effective date of the transaction to which it relates.
(2) An assessment of a person to tax in a case involving a loss of tax brought about carelessly by the purchaser or a related person may be made at any time not more than 6 years after the effective date of the transaction to which it relates (subject to sub-paragraph (2A)).
(2A) An assessment of a person to tax in a case involving a loss of tax—
(a) brought about deliberately by the purchaser or a related person,
(b) attributable to a failure by the person to comply with an obligation under section 76(1) or paragraph 3(3)(a), 4(3)(a) or 8(3)(a) of Schedule 17A, ...
(c) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty's Revenue and Customs), or
(d) attributable to arrangements which were expected to give rise to a tax advantage in respect of which the person was under an obligation to notify the Commissioners for Her Majesty's Revenue and Customs under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so,
may be made at any time not more than 20 years after the effective date of the transaction to which it relates.
(3) An assessment under paragraph 29 (assessment to recover excessive repayment of tax) is not out of time—
(a) in a case where notice of enquiry is given into the land transaction return delivered by the person concerned, if it is made before the enquiry is completed;
(b) in any case, if it is made within one year after the repayment in question was made.
(4) Where the purchaser has died—
(a) any assessment on the personal representatives of the deceased must be made within 4 years after his death, and
(b) an assessment shall not be made by virtue of sub-paragraph (2) in respect of a transaction of which the effective date was more than six years before the death.
(5) Any objection to the making of an assessment on the ground that the time limit for making it has expired can only be made on an appeal against the assessment.
(6) In this paragraph “related person”, in relation to a purchaser, means—
(a) a person acting on behalf of the purchaser, or
(b) a person who was a partner of the purchaser at the relevant time.
Losses brought about carelessly or deliberately
31A (1) This paragraph applies for the purposes of paragraph 31.
(2) A loss of tax is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss.
(3) Where—
(a) information is provided to Her Majesty's Revenue and Customs,
(b) the person who provided the information, or the person on whose behalf the information was provided, discovers some time later that the information was inaccurate, and
(c) that person fails to take reasonable steps to inform Her Majesty's Revenue and Customs,
any loss of tax brought about by the inaccuracy is to be treated as having been brought about carelessly by that person.
(4) References to a loss of tax brought about deliberately by a person include a loss of tax brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
Assessment procedure
32 (1) Notice of an assessment must be served on the purchaser.
(2) The notice must state—
(a) the tax due,
(b) the date on which the notice is issued, and
(c) the time within which any appeal against the assessment must be made.
(3) After notice of the assessment has been served on the purchaser, the assessment may not be altered except in accordance with the express provisions of this Part of this Act.
(4) Where an officer of the Board has decided to make an assessment to tax, and has taken all other decisions needed for arriving at the amount of the assessment, he may entrust to some other officer of the Board responsibility for completing the assessing procedure, whether by means involving the use of a computer or otherwise, including responsibility for serving notice of the assessment.
Part 6 Relief in case of overpaid tax or excessive assessment
Relief in case of double assessment
33 (1) A person who believes he has been assessed to tax more than once in respect of the same matter may make a claim to the Inland Revenue for relief against any double charge .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) An appeal may be made against a decision on a claim for relief under this paragraph.
Claim for relief for overpaid tax etc
34 (1) This paragraph applies where—
(a) a person has paid an amount by way of tax but believes that the tax was not due, or
(b) a person has been assessed as liable to pay an amount by way of tax, or there has been a determination to that effect, but the person believes that the tax is not due.
(2) The person may make a claim to the Commissioners for Her Majesty's Revenue and Customs for repayment or discharge of the amount.
(3) Paragraph 34A makes provision about cases in which the Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under this paragraph.
(4) The following make further provision about making and giving effect to claims under this paragraph—
(a) paragraphs 34B to 34D, and
(b) Schedule 11A.
(5) Paragraph 34E makes provision about the application of this paragraph and paragraphs 34A to 34D to amounts paid under contract settlements.
(6) The Commissioners for Her Majesty's Revenue and Customs are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided—
(a) by this Schedule and Schedule 11A (following a claim under this paragraph), or
(b) by or under another provision of this Part of this Act.
(7) For the purposes of this paragraph and paragraphs 34A to 34E, an amount paid by one person on behalf of another is treated as paid by the other person.
Cases in which Commissioners not liable to give effect to a claim
34A (1) The Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under paragraph 34 if or to the extent that the claim falls within a case described in this paragraph.
(2) Case A is where the amount paid, or liable to be paid, is excessive by reason of—
(a) a mistake in a claim or election, or
(b) a mistake consisting of making or giving, or failing to make or give, a claim or election.
(3) Case B is where the claimant is or will be able to seek relief by taking other steps under this Part of this Act.
(4) Case C is where the claimant—
(a) could have sought relief by taking such steps within a period that has now expired, and
(b) knew, or ought reasonably to have known, before the end of that period that such relief was available.
(5) Case D is where the claim is made on grounds that—
(a) have been put to a court or tribunal in the course of an appeal by the claimant relating to the amount paid or liable to be paid, or
(b) have been put to Her Majesty's Revenue and Customs in the course of an appeal by the claimant relating to that amount that is treated as having been determined by a tribunal (by virtue of paragraph 37 (settling of appeals by agreement)).
(6) Case E is where the claimant knew, or ought reasonably to have known, of the grounds for the claim before the latest of the following—
(a) the date on which an appeal by the claimant relating to the amount paid, or liable to be paid, in the course of which the ground could have been put forward (a “relevant appeal”) was determined by a court or tribunal (or is treated as having been so determined),
(b) the date on which the claimant withdrew a relevant appeal to a court or tribunal, and
(c) the end of the period in which the claimant was entitled to make a relevant appeal to a court or tribunal.
(7) Case F is where the amount in question was paid or is liable to be paid—
(a) in consequence of proceedings enforcing the payment of that amount brought against the claimant by Her Majesty's Revenue and Customs, or
(b) in accordance with an agreement between the claimant and Her Majesty's Revenue and Customs settling such proceedings.
(8) Case G is where—
(a) the amount paid, or liable to be paid, is excessive by reason of a mistake in calculating the claimant's liability to tax, and
(b) liability was calculated in accordance with the practice generally prevailing at the time.
(9) Case G does not apply where the amount paid, or liable to be paid, is tax which has been charged contrary to EU law.
(10) For the purposes of sub-paragraph (9), an amount of tax is charged contrary to EU law if, in the circumstances in question, the charge to tax is contrary to—
(a) the provisions relating to the free movement of goods, persons, services and capital in Titles II and IV of Part 3 of the Treaty on the Functioning of the European Union, or
(b) the provisions of any subsequent treaty replacing the provisions mentioned in paragraph (a).
Making a claim
34B (1) A claim under paragraph 34 may not be made more than 4 years after the effective date of the transaction.
(2) A claim under paragraph 34 may not be made by being included in a land transaction return.
The claimant: partnerships
34C (1) This paragraph applies where an amount is paid, or is liable to be paid, in respect of a land transaction entered into as purchaser by or on behalf of the members of a partnership (within the meaning of Schedule 15).
(2) Paragraphs 6 and 8 of Schedule 15 do not apply to a claim under paragraph 34 in respect of the amount.
(3) A claim under paragraph 34 in respect of the amount—
(a) may be made by a relevant person who has been nominated to make the claim by all of the relevant persons, and
(b) may not be made by any other person.
(4) In relation to such a claim, references in paragraph 34A to the claimant are to any of the relevant persons.
(5) The relevant persons are—
(a) any person who was a partner in the partnership at the effective date of the transaction, and
(b) the personal representative of such a person.
Assessment of claimant in connection with claim
34D (1) This paragraph applies where—
(a) a claim is made under paragraph 34,
(b) the grounds for giving effect to the claim also provide grounds for a discovery assessment on the claimant in respect of any land transaction, and
(c) such an assessment could be made but for a relevant restriction.
(2) The reference to the claimant in subsection (1)(b) includes—
(a) in relation to a claim for an amount paid or liable to be paid in respect of a land transaction entered into as purchaser by or on behalf of the members of a partnership (within the meaning of Schedule 15), a responsible partner within the meaning of paragraph 6(2) of Schedule 15;
(b) in relation to a claim for an amount paid or liable to be paid in respect of a land transaction entered into by trustees of a settlement (within the meaning of Schedule 16), a responsible trustee within the meaning of paragraph 5(3) of Schedule 16.
(3) The following are relevant restrictions—
(a) the restrictions in paragraph 30, and
(b) the expiry of a time limit for making a discovery assessment.
(4) Where this paragraph applies—
(a) the relevant restrictions are to be disregarded, and
(b) the discovery assessment is not out of time if it is made before the final determination of the claim.
(5) A claim is not finally determined until it, or the amount to which it relates, can no longer be varied (whether on appeal or otherwise).
Contract settlements
34E (1) In paragraph 34(1)(a) the reference to an amount paid by a person by way of tax includes an amount paid by a person under a contract settlement in connection with tax believed to be due.
(2) Sub-paragraphs (3) to (6) apply if the person who paid the amount under the contract settlement (“the payer”) and the person from whom the tax was due (“the taxpayer”) are not the same person.
(3) In relation to a claim under paragraph 34 in respect of that amount—
(a) the references to the claimant in paragraph 34A(5) to (7) (Cases D, E and F) have effect as if they included the taxpayer,
(b) the reference to the claimant in paragraph 34A(8) (Case G) has effect as if it were a reference to the taxpayer,
(c) the reference to the claimant in paragraph 34D(1)(b) has effect as if it were a reference to the taxpayer, and
(d) references to tax in Schedule 11A (as it applies to a claim under paragraph 34) include such an amount.
(4) Sub-paragraph (5) applies where the grounds for giving effect to a claim by the payer in respect of the amount also provide grounds for a discovery assessment on the taxpayer in respect of any land transaction.
(5) The Commissioners for Her Majesty's Revenue and Customs may set any amount repayable to the payer by virtue of the claim against any amount payable by the taxpayer by virtue of the assessment.
(6) The obligations of the Commissioners for Her Majesty's Revenue and Customs and the taxpayer are discharged to the extent of any set-off under sub-paragraph (5).
(7) “Contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners for Her Majesty's Revenue and Customs under or by virtue of an enactment.
Part 7 Reviews and appeals
Right of appeal
35 (1) An appeal may be brought against—
(a) an amendment of a self-assessment under paragraph 17 (amendment by Revenue during enquiry to prevent loss of tax),
(b) a conclusion stated or amendment made by a closure notice,
(c) a discovery assessment, ...
(d) an assessment under paragraph 29 (assessment to recover excessive repayment), or
(e) a Revenue determination under paragraph 25 (determination of tax chargeable if no return delivered).
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) If An appeal under sub-paragraph (1)(a) against an amendment of a self-assessment is made while an enquiry is in progress none of the steps mentioned in paragraph 36A(2)(a) to (c) may be taken in relation to the appeal until the enquiry is completed.
Notice of appeal
36 (1) Notice of an appeal under paragraph 35 must be given—
(a) in writing,
(b) within 30 days after the specified date,
(c) to the relevant officer of the Board.
(2) In relation to an appeal under paragraph 35(1)(a)—
(a) the specified date is the date on which the notice of amendment was issued, and
(b) the relevant officer of the Board is the officer by whom the notice of amendment was given.
(3) In relation to an appeal under paragraph 35(1)(b)—
(a) the specified date is the date on which the closure notice was issued, and
(b) the relevant officer of the Board is the officer by whom the closure notice was given.
(4) In relation to an appeal under paragraph 35(1)(c) or (d)—
(a) the specified date is the date on which the notice of assessment was issued, and
(b) the relevant officer of the Board is the officer by whom the notice of assessment was given.
(4A) In relation to an appeal under paragraph 35(1)(e) —
(a) the specified date is the date on which the Revenue determination was issued, and
(b) the relevant officer of the Board is the officer by whom the determination was made.
(5) The notice of appeal must specify the grounds of appeal.
(5A) The only grounds on which an appeal lies under paragraph 35(1)(e) are that—
(a) the purchase to which the determination relates did not take place,
(b) the interest in the land to which the determination relates has not been purchased,
(c) the contract for the purchase of the interest to which the determination relates has not been substantially performed, or
(d) the land transaction is not notifiable (for example, because the land transaction is exempt from charge under Schedule 3).
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appeal: HMRC review or determination by tribunal
36A (1) This paragraph applies if notice of appeal has been given to HMRC.
(2) In such a case—
(a) the appellant may notify HMRC that the appellant requires HMRC to review the matter in question (see paragraph 36B),
(b) HMRC may notify the appellant of an offer to review the matter in question (see paragraph 36C), or
(c) the appellant may notify the appeal to the tribunal (see paragraph 36D).
(3) See paragraphs 36G and 36H for provision about notifying appeals to the tribunal after a review has been required by the appellant or offered by HMRC.
(4) This paragraph does not prevent the matter in question from being dealt with in accordance with paragraph 37(1) (settling of appeals by agreement).
Appellant requires review by HMRC
36B (1) Sub-paragraphs (2) and (3) apply if the appellant notifies HMRC that the appellant requires HMRC to review the matter in question.
(2) HMRC must, within the relevant period, notify the appellant of HMRC’s view of the matter in question.
(3) HMRC must review the matter in question in accordance with paragraph 36E.
(4) The appellant may not notify HMRC that the appellant requires HMRC to review the matter in question and HMRC shall not be required to conduct a review if—
(a) the appellant has already given a notification under this paragraph in relation to the matter in question,
(b) HMRC have given a notification under paragraph 36C in relation to the matter in question, or
(c) the appellant has notified the appeal to the tribunal under paragraph 36D.
(5) In this paragraph “relevant period” means—
(a) the period of 30 days beginning with the day on which HMRC receive the notification from the appellant, or
(b) such longer period as is reasonable.
HMRC offer review
36C (1) Sub-paragraphs (2) to (6) apply if HMRC notify the appellant of an offer to review the matter in question.
(2) When HMRC notify the appellant of the offer, HMRC must also notify the appellant of HMRC’s view of the matter in question.
(3) If, within the acceptance period, the appellant notifies HMRC of acceptance of the offer, HMRC must review the matter in question in accordance with paragraph 36E.
(4) If the appellant does not give HMRC such a notification within the acceptance period, HMRC’s view of the matter in question is to be treated as if it were contained in an agreement in writing under paragraph 37(1) for the settlement of that matter.
(5) The appellant may not give notice under paragraph 37(2) (desire to withdraw from agreement) in a case where sub-paragraph (4) applies.
(6) Sub-paragraph (4) does not apply to the matter in question if, or to the extent that, the appellant notifies the appeal to the tribunal under paragraph 36H.
(7) HMRC may not notify the appellant of an offer to review the matter in question (and, accordingly, HMRC shall not be required to conduct a review) if—
(a) HMRC have already given a notification under this paragraph in relation to the matter in question,
(b) the appellant has given a notification under paragraph 36B in relation to the matter in question, or
(c) the appellant has notified the appeal to the tribunal under paragraph 36D.
(8) In this paragraph “acceptance period” means the period of 30 days beginning with the date of the document by which HMRC notify the appellant of the offer to review the matter in question.
Notifying appeal to the tribunal
36D (1) This paragraph applies in a case where paragraph 36A applies.
(2) The appellant may notify the appeal to the tribunal.
(3) If the appellant notifies the appeal to the tribunal, the tribunal is to decide the matter in question.
(4) Sub-paragraphs (2) and (3) do not apply in a case where—
(a) HMRC have given a notification of their view of the matter in question under paragraph 36B, or
(b) HMRC have given a notification under paragraph 36C in relation to the matter in question.
(5) In a case falling within sub-paragraph (4)(a) or (b), the appellant may notify the appeal to the tribunal, but only if permitted to do so by paragraph 36G or 36H.
Nature of review etc
36E (1) This paragraph applies if HMRC are required by paragraph 36B or 36C to review the matter in question.
(2) The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.
(3) For the purpose of sub-paragraph (2), HMRC must, in particular, have regard to steps taken before the beginning of the review—
(a) by HMRC in deciding the matter in question, and
(b) by any person in seeking to resolve disagreement about the matter in question.
(4) The review must take account of any representations made by the appellant at a stage which gives HMRC a reasonable opportunity to consider them.
(5) The review may conclude that HMRC’s view of the matter in question is to be—
(a) upheld,
(b) varied, or
(c) cancelled.
(6) HMRC must notify the appellant of the conclusions of the review and their reasoning within—
(a) the period of 45 days beginning with the relevant day, or
(b) such other period as may be agreed.
(7) In sub-paragraph (6) “relevant day” means—
(a) in a case where the appellant required the review, the day when HMRC notified the appellant of HMRC’s view of the matter in question,
(b) in a case where HMRC offered the review, the day when HMRC received notification of the appellant’s acceptance of the offer.
(8) Where HMRC are required to undertake a review but do not give notice of the conclusions within the period specified in sub-paragraph (6), the review is treated as having concluded that HMRC’s view of the matter in question (see paragraphs 36B(2) and 36C(2)) is upheld.
(9) If sub-paragraph (8) applies, HMRC must notify the appellant of the conclusions which the review is treated as having reached.
Effect of conclusions of review
36F (1) This paragraph applies if HMRC give notice of the conclusions of a review (see paragraph 36E).
(2) The conclusions are to be treated as if they were an agreement in writing under paragraph 37(1) for the settlement of the matter in question.
(3) The appellant may not give notice under paragraph 37(2) (desire to withdraw from agreement) in a case where sub-paragraph (2) applies.
(4) Sub-paragraph (2) does not apply to the matter in question if, or to the extent that, the appellant notifies the appeal to the tribunal under paragraph 36G.
Notifying appeal to tribunal after review concluded
36G (1) This paragraph applies if—
(a) HMRC have given notice of the conclusions of a review in accordance with paragraph 36E, or
(b) the period specified in paragraph 36E(6) has ended and HMRC have not given notice of the conclusions of the review.
(2) The appellant may notify the appeal to the tribunal within the post-review period.
(3) If the post-review period has ended, the appellant may notify the appeal to the tribunal only if the tribunal gives permission.
(4) If the appellant notifies the appeal to the tribunal, the tribunal is to determine the matter in question.
(5) In this paragraph “post-review period” means—
(a) in a case falling with sub-paragraph (1)(a), the period of 30 days beginning with the date of the document in which HMRC give notice of the conclusions of the review in accordance with paragraph 36E(6), or
(b) in a case falling within sub-paragraph (1)(b), the period that—
(i) begins with the day following the last day of the period specified in paragraph 36E(6), and
(ii) ends 30 days after the date of the document in which HMRC give notice of the conclusions of the review in accordance with paragraph 36E(9).
Notifying appeal to tribunal after review offered but not accepted
36H (1) This paragraph applies if—
(a) HMRC have offered to review the matter in question (see paragraph 36C), and
(b) the appellant has not accepted the offer.
(2) The appellant may notify the appeal to the tribunal within the acceptance period.
(3) But if the acceptance period has ended, the appellant may notify the appeal to the tribunal only if the tribunal gives permission.
(4) If the appellant notifies the appeal to the tribunal, the tribunal is to determine the matter in question.
(5) In this paragraph “acceptance period” has the same meaning as in paragraph 36C.
Other interpretation
36I (1) In paragraphs 36A to 36H—
(a) “matter in question” means the matter to which an appeal relates;
(b) a reference to a notification is a reference to a notification in writing.
(2) In paragraphs 36A to 36H, a reference to the appellant includes a person acting on behalf of the appellant except in relation to—
(a) notification of HMRC’s view under paragraph 36B(2),
(b) notification by HMRC of an offer of review (and of their view of the matter) under paragraph 36C,
(c) notification of the conclusions of a review under paragraph 36E(6), and
(d) notification of the conclusions of a review under paragraph 36E(9).
(3) But if a notification falling within any of the sub-paragraphs of paragraph (2) is given to the appellant, a copy of the notification may also be given to a person acting on behalf of the appellant.
Settling of appeals by agreement
37 (1) If, before an appeal under paragraph 35 is determined, the appellant and the Inland Revenue agree that the decision appealed against—
(a) should be upheld without variation,
(b) should be varied in a particular manner, or
(c) should be discharged or cancelled,
the same consequences shall follow, for all purposes, as would have followed if, at the time the agreement was come to, the tribunal had determined the appeal and had upheld the decision without variation, varied it in that manner or discharged or cancelled it, as the case may be.
(2) Sub-paragraph (1) does not apply if, within 30 days from the date when the agreement was come to, the appellant gives notice in writing to the Inland Revenue that he wishes to withdraw from the agreement.
(3) Where the agreement is not in writing—
(a) sub-paragraphs (1) and (2) do not apply unless the fact that an agreement was come to, and the terms agreed, are confirmed by notice in writing given by the Inland Revenue to the appellant or by the appellant to the Inland Revenue, and
(b) the references in those provisions to the time when the agreement was come to shall be read as references to the time when the notice of confirmation was given.
(4) Where—
(a) the appellant notifies the Inland Revenue, orally or in writing, that he does not wish to proceed with the appeal, and
(b) the Inland Revenue do not, within 30 days after that notification, give the appellant notice in writing indicating that they are unwilling that the appeal should be withdrawn,
the provisions of sub-paragraphs (1) to (3) have effect as if, at the date of the appellant’s notification, the appellant and the Inland Revenue had come to an agreement (orally or in writing, as the case may be) that the decision under appeal should be upheld without variation.
(5) References in this paragraph to an agreement being come to with an appellant, and to the giving of notice or notification by or to the appellant, include references to an agreement being come to, or notice or notification being given by or to, a person acting on behalf of the appellant in relation to the appeal.
Recovery of tax not postponed by appeal
38 (1) Where there is an appeal ... under paragraph 35, the tax charged by the amendment or assessment in question remains due and payable as if there had been no appeal.
(2) Sub-paragraph (1) is subject to—
paragraph 39 (direction by the tribunal postponing payment), and
paragraph 40 (agreement to postpone payment).
Direction by the tribunal to postpone payment
39 (1) If the appellant has grounds for believing that the amendment or assessment overcharges the appellant to tax, or as a result of the conclusion stated in the closure notice the tax charged on the appellant is excessive, the appellant may—
(a) first apply by notice in writing to HMRC within 30 days of the specified date for a determination by them of the amount of tax the payment of which should be postponed pending the determination of the appeal;
(b) where such a determination is not agreed, refer the application for postponement to the tribunal within 30 days from the date of the document notifying HMRC’s decision on the amount to be postponed.
An application under sub-paragraph (a) must state the amount believed to be overcharged to tax and the grounds for that belief.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) An application may be made more than 30 days after the specified date if there is a change in the circumstances of the case as a result of which the appellant has grounds for believing that he is overcharged to tax by the decision appealed against.
(4) If, after any determination on such an application of the amount of tax the payment of which should be postponed, there is a change in the circumstances of the case as a result of which either party has grounds for believing that the amount so determined has become excessive or, as the case may be, insufficient, he may, if the parties cannot agree on a revised determination, apply, at any time before the determination of the appeal, to the tribunal for a revised determination of that amount.
(5) An application under this paragraph is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).
(6) The amount of tax of which payment is to be postponed pending the determination of the appeal is the amount (if any) by which it appears ..., that there are reasonable grounds for believing that the appellant is overcharged.
(7) Where an application is made under this paragraph, the date on which any tax of which payment is not postponed is due and payable shall be determined as if the tax were charged by an amendment or assessment of which notice was issued on the date on which the application was determined and against which there was no appeal.
(8) On the determination of the appeal—
(a) the date on which any tax payable in accordance with that determination is due and payable shall, so far as it is tax the payment of which had been postponed, or which would not have been charged by the amendment or assessment if there had been no appeal, be determined as if the tax were charged by an amendment or assessment—
(i) of which notice was issued on the date on which HMRC issues to the appellant a notice of the total amount payable in accordance with the determination, and
(ii) against which there had been no appeal, and
(b) any tax overpaid shall be repaid.
(9) Sub-paragraphs (10) and (11) apply where a person has been given an accelerated payment notice under Chapter 3 of Part 4 of the Finance Act 2014 and that notice has not been withdrawn.
(10) Nothing in this paragraph enables the postponement of the payment of (as the case may be)—
(a) the understated tax to which the payment specified in the notice under section 220(2)(b) of that Act relates, or
(b) the disputed tax specified in the notice under section 221(2)(b) of that Act.
(11) Accordingly, if the payment of an amount of tax within sub-paragraph (10)(b) is postponed by virtue of this paragraph immediately before the accelerated payment notice is given, it ceases to be so postponed with effect from the time that notice is given, and the tax is due and payable—
(a) if no representations were made under section 222 of that Act in respect of the notice, on or before the last day of the period of 90 days beginning with the day the notice is given, and
(b) if representations were so made, on or before whichever is later of—
(i) the last day of the 90 day period mentioned in paragraph (a), and
(ii) the last day of the period of 30 days beginning with the day on which HMRC's determination in respect of those representations is notified under section 222 of that Act.
Agreement to postpone payment of tax
40 (1) If the appellant and the relevant officer of the Board agree that payment of an amount of tax should be postponed pending the determination of the appeal, the same consequences shall follow, for all purposes, as would have followed if, at the time the agreement was come to, the tribunal had made a direction to the same effect.
This is without prejudice to the making of a further agreement or of a further direction.
(2) Where the agreement is not in writing—
(a) sub-paragraph (1) does not apply unless the fact that an agreement was come to, and the terms agreed, are confirmed by notice in writing given by the relevant officer of the Board to the appellant or by the appellant to that officer, and
(b) the reference in that provision to the time when the agreement was come to shall be read as a reference to the time when notice of confirmation was given.
(3) References in this paragraph to an agreement being come to with an appellant, and to the giving of notice to or by the appellant, include references to an agreement being come to, or notice being given to or by, a person acting on behalf of the appellant in relation to the appeal.
(4) Sub-paragraphs (9) to (11) of paragraph 39 apply for the purposes of this paragraph as they apply for the purposes of paragraph 39.
Tribunal determinations
41 The determination of the tribunal in relation to any proceedings under the enactments relating to stamp duty land tax shall be final and conclusive except as otherwise provided in—
(a) sections 9 to 14 of the Tribunals, Courts and Enforcement Act 2007,
(b) the Taxes Management Act 1970 applied as modified, or
(c) the enactments relating to stamp duty land tax.
Assessments and self assessments
42 (1) In this paragraph any reference to an appeal means an appeal under paragraphs 33(4) or 35(1).
(2) If, on an appeal notified to the tribunal, the tribunal decides—
(a) that the appellant is overcharged by a self-assessment; or
(b) that the appellant is overcharged by an assessment other than a self-assessment,
the assessment shall be reduced accordingly, but otherwise the assessment shall stand good.
(3) If, on appeal it appears to the tribunal—
(a) that the appellant is undercharged to stamp duty land tax by a self-assessment; or
(b) that the appellant is undercharged by an assessment other than a self-assessment,
the assessment shall be increased accordingly.
(4) Where, on an appeal against an assessment other than a self-assessment which—
(a) assesses an amount which is chargeable to stamp duty land tax, and
(b) charges stamp duty land tax on the amount assessed,
it appears to the tribunal as mentioned in sub-paragraphs (2) or (3), it may, unless the circumstances of the case otherwise require, reduce or increase only the amount assessed; and where an appeal is so determined the stamp duty land tax charged by that assessment shall be taken to have been reduced or increased accordingly.
Payment of stamp duty land tax where there is a further appeal
43 (1) Where a party to an appeal to the tribunal under paragraph 35 makes a further appeal, notwithstanding that the further appeal is pending, stamp duty land tax shall nevertheless be payable or repayable in accordance with the determination of the tribunal or court as the case may be.
(2) But if the amount charged by the assessment is altered by the order or judgment of the Upper Tribunal or court—
(a) if too much stamp duty land tax has been paid, the amount overpaid shall be refunded with such interest, if any, as may be allowed by that order or judgment; and
(b) if too little stamp duty land tax has been charged, the amount undercharged shall be due and payable at the expiration of a period of thirty days beginning with the date on which HMRC issue to the other party a notice of the total amount payable in accordance with the order or judgment.
(3) Sub-paragraph (4) applies where—
(a) an accelerated payment notice has been given to a party to the appeal under Chapter 3 of Part 4 of the Finance Act 2014 (and not withdrawn), and
(b) the assessment to which the appeal relates has effect, or partly has effect, to counteract the whole or part of the asserted advantage (within the meaning of section 219(3) of that Act) by reason of which the notice was given.
(4) If, on the application of HMRC, the relevant court or tribunal considers it necessary for the protection of the revenue, it may direct that sub-paragraph (1) does not apply so far as the stamp duty land tax relates to the counteraction of the whole or part of the asserted advantage, and—
(a) give permission to withhold all or part of any repayment, or
(b) require the provision of adequate security before repayment is made.
(5) “Relevant court or tribunal” means the tribunal or court from which permission or leave to appeal is sought.
Late notice of appeal
44 (1) This paragraph applies in a case where—
(a) notice of appeal may be given to HMRC under this Schedule or any other provision of Part 4 of this Act, but
(b) no notice is given before the relevant time limit.
(2) Notice may be given after the relevant time limit if—
(a) HMRC agree, or
(b) where HMRC do not agree, the tribunal gives permission.
(3) If the following conditions are met, HMRC shall agree to notice being given after the relevant time limit.
(4) Condition A is that the appellant has made a request in writing to HMRC to agree to the notice being given.
(5) Condition B is that HMRC are satisfied that there was reasonable excuse for not giving the notice before the relevant time limit.
(6) Condition C is that HMRC are satisfied that request under sub-paragraph (4) was made without unreasonable delay after the reasonable excuse ceased.
(7) If a request of the kind referred to in sub-paragraph (4) is made, HMRC must notify the appellant whether or not HMRC agree to the appellant giving notice of appeal after the relevant time limit.
(8) In this paragraph “relevant time limit”, in relation to notice of appeal, means the time before which the notice is to be given (but for this paragraph).
Questions to be determined by the relevant tribunal
45 (1) Where the question in any dispute on any appeal under paragraph 35(1) is a question of the market value of the subject matter of the land transaction that question shall be determined on a reference by the relevant tribunal.
(2) In this paragraph “the relevant tribunal” means—
(a) where the land is in England ... , the Upper Tribunal;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) where the land is in Northern Ireland, the Lands Tribunal for Northern Ireland.
Meaning of HMRC
46 In this Schedule “HMRC” means Her Majesty’s Revenue and Customs.
SCHEDULE 11 Stamp duty land tax: record-keeping where transaction is not notifiable
Section 79
Part 2 Duty to keep and preserve records
Duty to keep and preserve records
4 (A1) This paragraph applies where a transaction is not notifiable, unless the transaction is a transaction treated as taking place under a provision listed in section 79(2)(a) to (d).
(1) The purchaser must—
(a) keep such records as may be needed to enable him to demonstrate that the transaction is not notifiable, and
(b) preserve those records in accordance with this paragraph.
(2) The records must be preserved until the end of—
(a) the sixth anniversary of the effective date of the transaction, or
(b) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).
(3) The records required to be kept and preserved under this paragraph include—
(a) relevant instruments relating to the transaction, in particular, any contract or conveyance, and any supporting maps, plans or similar documents;
(b) records of relevant payments, receipts and financial arrangements.
(4) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents so specified.
(5) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(6) “Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.
Preservation of information etc
5 The duty under paragraph 4 to preserve records may be satisfied—
(a) by preserving them in any form and by any means, or
(b) by preserving the information contained in them in any form and by any means,
subject to any conditions or exceptions specified in writing by the Commissioners for Her Majesty's Revenue and Customs.
Penalty for failure to keep and preserve records
6 (1) A person who fails to comply with paragraph 4 in relation to a transaction is liable to a penalty not exceeding £3,000, subject to the following exception.
(2) No penalty is incurred if the Inland Revenue are satisfied that any facts that they reasonably require to be proved, and that would have been proved by the records, are proved by other documentary evidence provided to them.
SCHEDULE 11A Stamp duty land tax: claims not included in returns
Section 82A
Introductory
1 This Schedule applies to a claim under any provision of this Part other than a claim that is required to be made in, or by amendment to, a return under this Part. References in this Schedule to a claim shall be read accordingly.
Making of claims
2 (1) A claim must be made in such form as the Inland Revenue may determine.
(2) The form of claim must provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the claimant’s information and belief.
(3) The form of claim may require—
(a) a statement of the amount of tax that will be required to be discharged or repaid in order to give effect to the claim;
(b) such information as is reasonably required for the purpose of determining whether and, if so, the extent to which the claim is correct;
(c) the delivery with the claim of such statements and documents, relating to the information contained in the claim, as are reasonably required for the purpose mentioned in paragraph (b).
(4) A claim for repayment of tax may not be made unless the claimant has documentary evidence that the tax has been paid.
Duty to keep and preserve records
3 (1) A person who may wish to make a claim must—
(a) keep such records as may be needed to enable him to make a correct and complete claim, and
(b) preserve those records in accordance with this paragraph.
(2) The records must be preserved until the latest of the following times—
(a) the end of the period of twelve months beginning with day on which the claim was made;
(b) where there is an enquiry into the claim, or into an amendment of the claim, the time when the enquiry is completed;
(c) where the claim is amended and there is there is no enquiry into the amendment, the time when the Inland Revenue no longer have power to enquire into the amendment.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4A) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents so specified.
(4B) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(4C) Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.
(5) A person who fails to comply with this paragraph in relation to a claim that he makes is liable to a penalty not exceeding £3,000, subject to the following exception.
(6) No penalty is incurred if the Inland Revenue are satisfied that any facts that they reasonably require to be proved, and that would have been proved by the records, are proved by other documentary evidence provided to them.
Preservation of information etc
3A The duty under paragraph 3 to preserve records may be satisfied—
(a) by preserving them in any form and by any means, or
(b) by preserving the information contained in them in any form and by any means,
subject to any conditions or exceptions specified in writing by the Commissioners for Her Majesty's Revenue and Customs.
Amendment of claim by claimant
4 (1) The claimant may amend his claim by notice to the Inland Revenue.
(2) No such amendment may be made—
(a) more than twelve months after the day on which the claim was made, or
(b) if the Inland Revenue give notice under paragraph 7 (notice of enquiry), during the period—
(i) beginning with the day on which notice is given, and
(ii) ending with the day on which the enquiry under that paragraph is completed.
Correction of claim by Revenue
5 (1) The Inland Revenue may by notice to the claimant amend a claim so as to correct obvious errors or omissions in the claim (whether errors of principle, arithmetical mistakes or otherwise).
(2) No such correction may be made—
(a) more than nine months after the day on which the claim was made, or
(b) if the Inland Revenue give notice under paragraph 7 (notice of enquiry), during the period—
(i) beginning with the day on which notice is given, and
(ii) ending with the day on which the enquiry under that paragraph is completed.
(3) A correction under this paragraph is of no effect if, within three months from the date of issue of the notice of correction, the claimant gives notice rejecting the correction.
(4) Notice under sub-paragraph (3) must be given to the officer of the Board by whom the notice of correction was given.
Giving effect to claims and amendments
6 (1) As soon as practicable after a claim is made, or is amended under paragraph 4 or 5, the Inland Revenue shall give effect to the claim or amendment by discharge or repayment of tax.
(2) Where the Inland Revenue enquire into a claim or amendment—
(a) sub-paragraph (1) does not apply until a closure notice is given under paragraph 11 (completion of enquiry), and then it applies subject to paragraph 13 (giving effect to amendments under paragraph 11), but
(b) the Inland Revenue may at any time before then give effect to the claim or amendment, on a provisional basis, to such extent as they think fit.
Notice of enquiry
7 (1) The Inland Revenue may enquire into a person’s claim or amendment of a claim if they give him notice of their intention to do so (“notice of enquiry”) before the end of the period of nine months after the day on which the claim or amendment was made.
(2) A claim or amendment that has been the subject of one notice of enquiry may not be the subject of another.
Notice to produce documents etc for purposes of enquiry
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appeal against notice to produce documents etc
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Penalty for failure to produce documents etc
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Completion of enquiry
11 (1) An enquiry under paragraph 7 is completed when the Inland Revenue by notice (a “closure notice”) inform the purchaser that they have completed their enquiries and state their conclusions.
(2) A closure notice must either—
(a) state that in the opinion of the Inland Revenue no amendment of the claim is required, or
(b) if in the Inland Revenue’s opinion the claim is insufficient or excessive, amend the claim so as to make good or eliminate the deficiency or excess.
In the case of an enquiry into an amendment of a claim, paragraph (b) applies only so far as the deficiency or excess is attributable to the amendment.
(3) A closure notice takes effect when it is issued.
Direction to complete enquiry
12 (1) The claimant may apply to the tribunal for a direction that the Inland Revenue give a closure notice within a specified period.
(2) Any such application is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).
(3) The tribunal shall give a direction unless ... satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.
Giving effect to amendments under paragraph 11
13 (1) Within 30 days after the date of issue of a notice under paragraph 11(2)(b) (closure notice that amends claim), the Inland Revenue shall give effect to the amendment by making such adjustment as may be necessary, whether—
(a) by way of assessment on the claimant, or
(b) by discharge or repayment of tax.
(2) An assessment made under sub-paragraph (1) is not out of time if it is made within the time mentioned in that sub-paragraph.
Appeals against amendments under paragraph 11
14 (1) An appeal may be brought against a conclusion stated or amendment made by a closure notice.
(2) Notice of the appeal must be given—
(a) in writing,
(b) within 30 days after the date on which the closure notice was issued,
(c) to the officer of the Board by whom the closure notice was given.
(3) The notice of appeal must specify the grounds of appeal.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Paragraphs 36A to 37 , 44 and 45 of Schedule 10 ... applies in relation to an appeal under this paragraph as they apply in relation to an appeal under paragraph 35 of that Schedule.
(6) On an appeal against an amendment made by a closure notice, the tribunal may vary the amendment appealed against whether or not the variation is to the advantage of the appellant.
(7) Where any such amendment is varied, whether by the tribunal or by the order of a court, paragraph 13 (giving effect to amendments under paragraph 11) applies (with the necessary modifications) in relation to the variation as it applied in relation to the amendment.
Jurisdiction of Commissioners
15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 12 Stamp duty land tax: collection and recovery of tax
Section 91
Part 1 General
Issue of tax demands and receipts
1 (1) Where tax is due and payable, a collector may make demand of the sum charged from the person liable to pay it.
(2) On payment of the tax, the collector shall if so requested give a receipt.
Recovery of tax by distraint
2 (1) In ... Northern Ireland, if a person neglects or refuses to pay the sum charged, upon demand made by the collector, the collector may distrain upon the goods and chattels of the person charged (“the person in default”).
(2) For the purposes of levying such distress a justice of the peace, on being satisfied by information on oath that there is reasonable ground for believing that a person is neglecting or refusing to pay a sum charged, may issue a warrant in writing authorising a collector to break open, in the daytime, any house or premises, calling to his assistance any constable.
Every such constable shall, when so required, assist the collector in the execution of the warrant and in levying such distress in the house or premises.
(3) A levy or warrant to break open must be executed by, or under the direction of, and in the presence of, the collector.
(4) A distress levied by the collector shall be kept for five days, at the costs and charges of the person in default.
(5) If the person in default does not pay the sum due, together with the costs and charges, the distress shall be appraised by one or more independent persons appointed by the collector, and shall be sold by public auction by the collector for payment of the sum due and all costs and charges.
Any surplus resulting from the distress, after the deduction of the costs and charges and of the sum due, shall be restored to the owner of the goods distrained.
(6) The Treasury may by regulations make provision with respect to—
(a) the fees chargeable on or in connection with the levying of distress, and
(b) the costs and charges recoverable where distress has been levied.
Recovery of tax by diligence in Scotland
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part 2 Court proceedings
Civil proceedings in magistrates' court or court of summary jurisdiction
4 (1) An amount not exceeding £2,000 due and payable by way of tax is in England and Wales or Northern Ireland recoverable summarily as a civil debt in proceedings brought in the name of the collector.
(2) All or any of the sums recoverable under this paragraph that are—
(a) due from any one person, and
(b) payable to any one collector,
may be included in the same complaint, summons or other document required to be laid before or issued by justices.
Each such document shall, as respects each such sum, be construed as a separate document and its invalidity as respects any one such sum does not affect its validity as respects any other such sum.
(3) Proceedings under this paragraph in England and Wales may be brought at any time within one year from the time when the matter complained of arose.
(4) In sub-paragraph (1) the expression “recoverable summarily as a civil debt” in relation to proceedings in Northern Ireland means recoverable by proceedings under Article 62 of the Magistrates' Courts (Northern Ireland) Order 1981 (S.I. 1981/1675 (N.I. 26)).
(5) The Treasury may by order increase the sum specified in sub-paragraph (1).
Proceedings in county court or sheriff court
5 (1) Tax due and payable may be sued for and recovered from the person charged as a debt due to the Crown by proceedings ...—
(a) in the county court, or
(b) in a sheriff court.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In Northern Ireland—
(a) the reference in sub-paragraph (1) to the county court is to a county court held for a division under the County Courts (Northern Ireland) Order 1980 (S.I. 1980/397 (N.I. 3));
(b) proceedings may not be brought under this paragraph if the amount exceeds the limit specified in Article 10(1) of that Order;
(c) Part III of that Order (general civil jurisdiction) applies for the purposes of this paragraph; and
(d) sections 21 and 42(2) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)) apply as if any reference in those provisions to an enactment included this paragraph.
Proceedings in High Court or Court of Session
6 Tax may be sued for and recovered from the person charged—
(a) as a debt due to the Crown, or
(b) by any other means by which a debt of record or otherwise due to the Crown may be sued for and recovered,
by proceedings in the High Court or, in Scotland, in the Court of Session sitting as the Court of Exchequer.
...
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 13 Stamp duty land tax: information powers
Section 93
Part 1 Power of authorised officer to call for documents or information from taxpayer
Notice requiring taxpayer to deliver documents or provide information
Requirement of consent of the tribunal
Contents of notice under this Part
Summary of reasons to be given
Power to take copies of documents etc
Part 2 Power of authorised officer to call for documents from third party
Notice requiring documents to be delivered or made available
Requirement of consent of the tribunal
Contents of notice under paragraph 6
Copy of notice to be given to taxpayer
Summary of reasons to be given
Power to give notice relating to unnamed taxpayer or taxpayers
Contents of notice under paragraph 11
Power to take copies of documents etc
Part 5 Powers of board to call for documents or information
Notice requiring delivery of documents or provision of information
Contents of notice
Power to take copies of documents etc
Exclusion of personal records or journalistic material
Part 6 Order of judicial authority for the delivery of documents
Order for the delivery of documents
32 (1) The appropriate judicial authority may make an order under this paragraph if satisfied on information on oath given by an authorised officer of the Board—
(a) that there is reasonable ground for suspecting that an offence involving serious fraud in connection with, or in relation to, stamp duty land tax has been or is about to be committed, and
(b) that documents that may be required as evidence for the purposes of any proceedings in respect of such an offence are or may be in the power or possession of any person.
(2) An order under this paragraph is an order requiring the person who appears to the authority to have in his possession or power the documents specified or described in the order to deliver them to an officer of the Board within—
(a) ten working days after the day on which notice of the order is served on him, or
(b) such shorter or longer period as may be specified in the order.
For this purpose a “working day” means any day other than a Saturday, Sunday or public holiday.
(3) The appropriate judicial authority is—
(a) in England and Wales, a circuit judge;
(b) in Scotland, a sheriff;
(c) in Northern Ireland, a county court judge.
(4) Where in Scotland the information relates to persons residing or having places of business at addresses situated in different sheriffdoms—
(a) an application for an order may be made to the sheriff for the sheriffdom in which any of the addresses is situated, and
(b) where the sheriff makes an order in respect of a person residing or having a place of business in his own sheriffdom, he may also make orders in respect of all or any of the other persons to whom the information relates (whether or not they have an address within the sheriffdom).
(5) In sub-paragraph (1) an “authorised officer of the Board” means an officer of the Board authorised by the Board for the purposes of this Part of this Schedule.
(6) The Inland Revenue may make provision by regulations as to—
(a) the procedures for approving in any particular case the decision to apply for an order under this Part of this Schedule, and
(b) the descriptions of officer by whom such approval may be given.
Notice of application for order
33 (1) A person is entitled—
(a) to notice of the intention to apply for an order against him under paragraph 32, and
(b) to appear and be heard at the hearing of the application,
unless the appropriate judicial authority is satisfied that this would seriously prejudice the investigation of the offence.
(2) The Inland Revenue may make provision by regulations as to the notice to be given, the contents of the notice and the manner of giving it.
Obligations of person given notice of application
34 (1) A person who has been given notice of intention to apply for an order under paragraph 32 must not—
(a) conceal, destroy, alter or dispose of any document to which the application relates, or
(b) disclose to any other person information or any other matter likely to prejudice the investigation of the offence to which the application relates.
This is subject to the following qualifications.
(2) Sub-paragraph (1)(a) does not prevent anything being done—
(a) with the leave of the appropriate judicial authority,
(b) with the written permission of an officer of the Board,
(c) after the application has been dismissed or abandoned, or
(d) after any order made on the application has been complied with.
(3) Sub-paragraph (1)(b) does not prevent a professional legal adviser from disclosing any information or other matter—
(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client, or
(b) to any person—
(i) in contemplation or, or in connection with, legal proceedings, and
(ii) for the purposes of those proceedings.
This sub-paragraph does not apply in relation to any information or other matter that is disclosed with a view to furthering a criminal purpose.
(4) A person who fails to comply with the obligation in sub-paragraph (1)(a) or (b) may be dealt with as if he had failed to comply with an order under paragraph 32.
Exception of items subject to legal privilege
35 (1) This Part of this Schedule does not apply to items subject to legal privilege.
(2) Items “subject to legal privilege” means—
(a) communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client;
(b) communications between a professional legal adviser and his client or any person representing his client, or between such an adviser or his client or any such representative and any other person, made in connection with or in contemplation of legal proceedings and for the purposes of such proceedings;
(c) items enclosed with or referred to in such communications and made—
(i) in connection with the giving of legal advice, or
(ii) in connection with or in contemplation of legal proceedings and for the purposes of such proceedings,
when they are in possession of a person entitled to possession of them.
(3) Items held with the intention of furthering a criminal purpose are not subject to legal privilege.
Resolution of disputes as to legal privilege
36 (1) The Inland Revenue may make provision by regulations for the purposes of this Part of this Schedule for the resolution of disputes as to whether a document, or part of a document, is an item subject to legal privilege.
(2) The regulations may, in particular, make provision as to—
(a) the custody of the document whilst its status is being decided,
(b) the appointment of an independent, legally qualified person to decide the matter,
(c) the procedures to be followed, and
(d) who is to meet the costs of the proceedings.
Complying with an order
37 (1) The Inland Revenue may make provision by regulations as to how a person is to comply with an order under paragraph 32.
(2) The regulations may, in particular, make provision as to—
(a) the officer of the Board to whom the documents are to be produced,
(b) the address to which the documents are to be taken or sent, and
(c) the circumstances in which sending documents by post complies with the order.
(3) Where an order relates to a document in electronic or magnetic form, the order shall be taken to require the person to deliver the information recorded in the document in a form in which it is visible and legible.
Document not to be retained if photograph or copy sufficient
38 Where a document delivered to an officer of the Board under this Part of this Schedule is of such a nature that a photograph or copy of it would be sufficient—
(a) for use as evidence at a trial for an offence, or
(b) for forensic examination or for investigation in connection with an offence,
it shall not be retained longer than is necessary to establish that fact and to obtain the photograph or copy.
Access to or supply of photograph or copy of documents delivered
39 (1) If a request for permission to be granted access to a document that—
(a) has been delivered to an officer of the Board under this Part of this Schedule, and
(b) is retained by the Board for the purposes of investigating an offence,
is made to the officer in overall charge of the investigation by a person who had custody or control of the document immediately before it was so delivered, or by someone acting on behalf of any such person, the officer shall allow the person who made the request access to it under the supervision of an officer of the Board.
(2) If a request for a photograph or copy of any such document is made to the officer in overall charge of the investigation by a person who had custody or control of the document immediately before it was so delivered, or by someone acting on behalf of any such person, the officer shall—
(a) allow the person who made the request access to it under the supervision of an officer of the Board for the purpose of photographing or copying it, or
(b) photograph or copy it, or cause it to be photographed or copied.
(3) Where a document is photographed or copied under sub-paragraph (2)(b) the photograph or copy shall be supplied to the person who made the request.
(4) The photograph or copy shall be supplied within a reasonable time from the making of the request.
(5) There is no duty under this paragraph to grant access to, or to supply a photograph or copy of, a document if the officer in overall charge of the investigation for the purposes of which it was delivered has reasonable grounds for believing that to do so would prejudice—
(a) that investigation,
(b) the investigation of an offence other than the offence for the purposes of the investigation of which the document was delivered, or
(c) any criminal proceedings that may be brought as a result of—
(i) the investigation of which he is in charge, or
(ii) any such investigation as is mentioned in paragraph (b).
(6) The references in this paragraph to the officer in overall charge of the investigation is to the person whose name and address are endorsed on the order concerned as being the officer so in charge.
Sanction for failure to comply with order
40 (1) A person who fails to comply with an order under this Part of this Schedule may be dealt with as if he had committed a contempt of the court.
(2) For this purpose “the court” means—
(a) in relation to an order made by a circuit judge, the Crown Court;
(b) in relation to an order made by a sheriff, a sheriff court;
(c) in relation to an order made by a county court judge in Northern Ireland, a county court in Northern Ireland.
Notice of order, etc
41 The Inland Revenue may make provision by regulations as to the circumstances in which notice of an order under paragraph 32, or of an application for such an order, is to be treated as having been given.
General provisions about regulations
42 Regulations under this Part of this Schedule may contain such incidental, supplementary and transitional provision as appears to the Inland Revenue to be appropriate.
Part 8 Falsification etc of documents
Falsification etc of documents
53 (1) A person commits an offence if the person intentionally—
(a) falsifies, conceals, destroys or otherwise disposes of a relevant document, or
(b) causes or permits the falsification, concealment, destruction or disposal of a relevant document.
(2) A relevant document is a document that the person has been required by an order under Part 6 of this Schedule to deliver.
(3) A person does not commit an offence under this paragraph if the person acts—
(a) with the written permission of the tribunal or an officer of Revenue and Customs, or
(b) after the document has been delivered.
(4) A person does not commit an offence under this paragraph if the person acts after the end of the period of 2 years beginning with the date on which the order is made, unless before the end of that period an officer of Revenue and Customs has notified the person in writing that the order has not been complied with to the officer's satisfaction.
(5) A person guilty of an offence under this paragraph is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum;
(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine or to both.
SCHEDULE 14 Stamp duty land tax: determination of penalties and related appeals
Section 99
Determination of penalties and appeals
1 The provisions of this Schedule apply in relation to penalties under this Part.
Determination of penalty by officer of the Board
2 (1) An officer of the Board authorised for the purposes of this paragraph may make a determination—
(a) imposing the penalty, and
(b) setting it at such amount as in the officer’s opinion is correct or appropriate.
(2) Notice of the determination must be served on the person liable to the penalty.
(3) The notice must also state—
(a) the date on which the notice is issued, and
(b) the time within which an appeal against the determination may be made.
(4) A penalty determined under this paragraph is due and payable at the end of the period of 30 days beginning with the date of issue of the notice of determination.
(5) Where an officer of the Board has decided to impose a penalty, and has taken all other decisions needed for arriving at the amount of the penalty, he may entrust to any other officer of the Board responsibility for completing the determination procedure, whether by means involving the use of a computer or otherwise, including responsibility for serving notice of the determination.
Alteration of penalty determination
3 (1) After notice has been served of the determination of a penalty, the determination cannot be altered except in accordance with this paragraph or on appeal.
(2) If it is discovered by an authorised officer that the amount of the penalty is or has become insufficient, the officer may make a determination in a further amount so that the penalty is set at the amount which in the officer’s opinion is correct or appropriate.
(3) If in the case of a tax-related penalty it is discovered by an authorised officer that the amount taken into account as the amount of tax is or has become excessive, he may revise the determination so that the penalty is set at the amount that is correct.
Where more than the correct amount has already been paid the appropriate amount shall be repaid.
(4) In this paragraph an “authorised officer” means an officer of the Board authorised by the Board for the purposes of this paragraph.
Liability of personal representatives
4 If a person liable to a penalty has died—
(a) any determination that could have been made in relation to that person may be made in relation to his personal representatives, and
(b) any penalty imposed on them is a debt due from and payable out of the person’s estate.
Appeal against penalty determination
5 (1) An appeal may be made against the determination of a penalty.
(2) Notice of appeal must be given in writing to the officer of the Board by whom the determination was made within 30 days of the date of issue of the notice of determination.
(3) The notice of appeal must specify the grounds of appeal.
(4) On an appeal under this paragraph that is notified to the First-tier Tribunal, the tribunal may—
(a) if it appears ... that no penalty has been incurred, set the determination aside;
(b) if the amount determined appears ... to be appropriate, confirm the determination;
(c) if the amount determined appears ... to be excessive, reduce it to such other amount (including nil) as appears to them to be appropriate;
(d) if the amount determined appears ... to be insufficient, increase it to such amount, not exceeding the permitted maximum, as the First-tier Tribunal considers appropriate.
(5) The provisions of paragraphs 36A to 36I of Schedule 10 apply to appeals under this paragraph.
Further appeal
6 (1) In addition to any right of appeal on a point of law under section 11(2) of the Tribunals, Courts and Enforcement Act 2007, the person liable to the penalty may appeal to the Upper Tribunal against the amount of the penalty which has been determined under paragraph (5), but not against any decision which falls under section 11(5)(d) or (e) of that Act and was made in connection with the determination of the amount of the penalty.
(1A) Section 11(3) and (4) of the Tribunals, Courts and Enforcement Act 2007 applies to the right of appeal under sub-paragraph (1) as it applies to the right of appeal under section 11(2) of that Act.
(2) On an appeal under this paragraph the Upper Tribunal has the same powers as are conferred on the First-tier Tribunal by paragraph 5(4) above.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Penalty proceedings before the court
7 (1) Where in the opinion of the Board the liability of a person for a penalty arises by reason of his fraud, or the fraud of another person, proceedings for the penalty may be brought—
(a) in the High Court, or
(b) in Scotland, in the Court of Session sitting as the Court of Exchequer.
(2) Proceedings under this paragraph in England and Wales shall be brought—
(a) by and in the name of the Board as an authorised department for the purposes of the Crown Proceedings Act 1947 (c. 44), or
(b) in the name of the Attorney General.
Any such proceedings shall be deemed to be civil proceedings by the Crown within the meaning of Part 2 of the Crown Proceedings Act 1947.
(3) Proceedings under this paragraph in Scotland shall be brought in the name of the Advocate General for Scotland.
(4) Proceedings under this paragraph in Northern Ireland shall be brought—
(a) by and in the name of the Board as an authorised department for the purposes of the Crown Proceedings Act 1947 as for the time being in force in Northern Ireland, or
(b) in the name of the Advocate General for Northern Ireland.
Any such proceedings shall be deemed to be civil proceedings within the meaning of Part 2 of the Crown Proceedings Act 1947 as for the time being in force in Northern Ireland.
(5) If in proceedings under this paragraph the court does not find that fraud is proved but considers that the person concerned is nevertheless liable to a penalty, the court may determine a penalty notwithstanding that, but for the opinion of the Board as to fraud, the penalty would not have been a matter for the court.
(6) Paragraph 2 (determination of penalty by officer of the Board) does not apply where proceedings are brought under this paragraph.
(7) In relation to any time before the coming into force of section 2(1) of the Justice (Northern Ireland) Act 2002 (c. 26), the reference in sub-paragraph (4)(b) to the Advocate General for Northern Ireland shall be read as a reference to the Attorney General for Northern Ireland.
Time limit for determination of penalties
8 (1) The following time limits apply in relation to the determination of penalties under this Schedule.
(2) The general rule is that—
(a) no penalty may be determined under paragraph 2 (determination by officer of Board), and
(b) no proceedings for a penalty may be brought under paragraph 7 (penalty proceedings before the court),
more than 4 years after the date on which the penalty was incurred or, in the case of a daily penalty, began to be incurred (“the relevant date”) . This rule is subject to the following provisions of this paragraph.
(3) Where the amount of a penalty is to be ascertained by reference to the tax chargeable in respect of a transaction, a penalty may be determined under paragraph 2, or proceedings for a penalty may be begun under paragraph 7, at any time within three years after the final determination of the amount of tax by reference to which the amount of the penalty is to be determined (subject to any of the following provisions of this paragraph allowing a longer period) .
(4) Sub-paragraph (3) does not apply where a person has died and the determination would be made in relation to his personal representatives if the tax was charged in an assessment made more than six years after the effective date of the transaction to which it relates.
(4A) Where a person is liable to a penalty in a case involving a loss of tax brought about carelessly by the person (or by another person acting on that person's behalf), the penalty may be determined, or the proceedings may be brought, at any time not more than 6 years after the relevant date (subject to sub-paragraphs (4B) and (5)).
(4B) Where a person is liable to a penalty in a case involving a loss of tax—
(a) brought about deliberately by the person (or by another person acting on that person's behalf),
(b) attributable to a failure by the person to comply with an obligation under section 76(1) or paragraph 3(3)(a), 4(3)(a) or 8(3)(a) of Schedule 17A, or
(c) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty's Revenue and Customs),
the penalty may be determined, or the proceedings may be brought, at any time not more than 20 years after the relevant date.
(4C) Paragraph 31A of Schedule 10 (losses brought about carelessly or deliberately) applies for the purpose of this paragraph.
(5) A penalty under section 96 (penalty for assisting in preparation of incorrect return) may be determined by an officer of the Board, or proceedings for such a penalty may be commenced before a court, at any time within 20 years after the date on which the penalty was incurred.