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Finance Act 2003

Type Public General Act

Publication 2003-07-10

Last updated 2025-03-20

State In force

Department Statute Law Database

Source legislation.gov.uk

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Reform history JSON API

(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,

(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.

Application of charities relief

Meaning of “restricted shares”

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

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.

First-time buyers

58D

(1) Schedule 6B provides for relief in the case of transfers involving multiple dwellings.

(2) Any relief under that Schedule must be claimed in a land transaction return or an amendment of such a return.

73BA

(1) In sections 71A to 73B “financial institution” has the meaning given by section 564B of the Income Tax Act 2007.

(2) For this purpose section 564B(1) applies as if paragraph (d) were omitted.

(3) In sections 71A, 73AB and 73B, “financial institution” also includes a person with permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity specified in Article 63F(1) of the Financial Services and Markets Act (Regulated Activities) Order 2001 (S.I. 2001/544) (entering into regulated home purchase plans as home purchase provider).

Sections 71A to 73: first-time buyers

Gifts with reservation

Derivative contracts: transactions within groups

Supplies not known to be taxable when made, etc

Accounts of Consolidated Fund and National Loans Fund

Acquisition by property trader from individual where chain of transactions breaks down

Acquisition by property trader from individual acquiring new dwelling

Debt Management Account: abolition of borrowing cap

Definition of liabilities and assets of National Loans Fund

Schedule 6B

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,

(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

(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),

(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, andthe 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,

(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.

Transfer of partnership interest pursuant to earlier arrangements

Meaning of “restricted shares”

Liability for tax

Circumstances in which group relief withdrawn

Provision of services through intermediary

Consequential amendments

Payroll giving: extension of 10% supplement to 5th April 2004

PAYE: regulations and notional payments

Meaning of “effective date” of a transaction

Circumstances in which relief for company acquisitions withdrawn

Employee securities and options

Personal pension arrangements: limit on contributions

Authorised unit trusts, OEICs and common investment funds

Exemption for fuel used in recycling processes

Amendments about registration, payment etc

Electricity from renewable sources etc

Ordinary accounts and investment accounts

Mandatory electronic payment

Acquisition by house-building company from individual acquiring new dwelling

Introduction

55A

Schedule 4A provides for the calculation of the tax chargeable in respect of certain transactions involving higher threshold interests in dwellings.

Acquisitions by certain health service bodies

67A

(1) A land transaction is exempt from charge if the purchaser is any of the following—

(a) NHS England;

(b) an integrated care board established under section 14Z25 of the National Health Service Act 2006;

(ba) an NHS trust established under section 25 of the National Health Service Act 2006;

(d) a Local Health Board established under section 11 of the National Health Service (Wales) Act 2006;

(e) a National Health Service trust established under section 18 of that Act;

(f) a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991.

(2) Any relief under this section must be claimed in a land transaction return or an amendment of such a return.

Adjustment where contingency ceases or consideration is ascertained

Meaning of “effective date” of a transaction

Provision of services through intermediary

Deferred unascertainable consideration: election for treatment of loss

Gifts with reservation

SCHEDULE 4A

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),

(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

(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, andis 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, andis 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.

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.

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).

Introduction

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,

(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, andcarries 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, andin Scotland, any right in security.

Alternative property finance: land sold to financial institution and leased to person

Alternative property finance in Scotland: land sold to financial institution and leased to person

81ZA

(1) Where relief given in respect of a transaction entered into under alternative finance arrangements is withdrawn to any extent under any of paragraphs 6D, 6F, 6G , 6H or 6I of Schedule 4A (higher rate of tax: alternative finance arrangements) or under Part 3 of Schedule 6C (relief for special tax sites) in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies—

(a) the relevant person must deliver a return to HMRC before the end of the period of 30 days after the date of the disqualifying event;

(b) the return must contain a self-assessment of the additional tax chargeable as a result of the withdrawal of the relief;

(c) the tax so chargeable is calculated according to the effective date of the transaction in respect of which the relief was allowed.

(2) The provisions of Schedule 10 (returns, assessments and other matters) apply for the purposes of this section with the following modifications—

(a) references to a return under section 76 (general requirement to deliver land transaction return) are to be read as references to a return under subsection (1);

(b) references to the transaction to which a return relates are to be read as references to the withdrawal of relief in respect of which the return is required under subsection (1);

(c) references to a chargeable transaction to which (as yet) no return relates are to be read as references to the withdrawal of relief under any of the provisions mentioned in subsection (1);

(d) references to the effective date of a transaction are to be read as references to the date of the disqualifying event;

(e) references to the purchaser are to be read as references to the relevant person so far as that is necessary as a result of subsection (1) of this section or section 85(3) (payment of additional tax by relevant person where relief withdrawn);

(f) paragraph 36(5A) is to be read as if it also permitted an appeal under paragraph 35(1)(e) on the ground that no further return is required.

(3) In this section “the date of the disqualifying event” means —

(a) where the relief was given under paragraph 5, 5B, 5C, 5D or 5F of Schedule 4A, the first day in the control period on which a relevant requirement was not met;

(b) where the relief was given under paragraph 5FA of Schedule 4A, the date determined in accordance with subsection (5A).

(c) where the relief was given under Part 2 of Schedule 6C, the last day in the control period on which the qualifying land is used exclusively in a qualifying manner.

(4) In subsection (3)(a) “relevant requirement” means—

(a) where the relief was given under paragraph 5 of Schedule 4A (businesses of letting, trading in or redeveloping properties), a requirement under paragraph 5G(3) of that Schedule;

(b) where the relief was given under paragraph 5B of that Schedule (trades involving making a dwelling available to the public), a requirement under paragraph 5H(3) of that Schedule;

(c) where the relief was given under paragraph 5C of that Schedule (financial institutions acquiring dwellings in the course of lending), a requirement under paragraph 5I(3) of that Schedule;

(d) where the relief was given under paragraph 5D of that Schedule (dwellings for occupation by certain employees etc), a requirement under paragraph 5J(3) of that Schedule;

(e) where the relief was given under paragraph 5F of that Schedule (farmhouses), a requirement under paragraph 5K(3) of that Schedule.

(5) In subsection (3)(a) “the control period” has the same meaning as in paragraph 5G, 5H, 5I, 5J or 5K (as the case requires) of Schedule 4A.

(5A) For the purposes of subsection (3)(b) (relief withdrawn because the conditions in paragraph 6I(2) of Schedule 4A are met), the date is—

(a) where paragraph 6I(3) of Schedule 4A does not apply, the first day in the period mentioned in paragraph 6I(2)(a) of that Schedule on which the relevant person is not a qualifying housing body;

(b) where paragraph 6I(3) or (6) of that Schedule applies and relief is withdrawn because condition A in paragraph 6I(4) of that Schedule is met, the day of succession of the relevant successor;

(c) where paragraph 6I(3) or (6) of that Schedule applies and relief is withdrawn because condition B in paragraph 6I(5) of that Schedule is met, the first day in the part of the control period that falls after the day of succession of the relevant successor on which the relevant successor is not a qualifying housing body.

(6) In this section—

“alternative finance arrangements” means any arrangements such as are mentioned in section 71A, 72, 72A or 73;

“the relevant person” means—the person (other than the financial institution) who entered into the arrangements in question, orwhere relief is withdrawn to any extent under paragraph 6I of Schedule 4A in a case to which paragraph 6I(3) or (6) applies, the relevant successor;

“the relevant successor” means the person who is the most recent successor in the chain of succession at the time relief is withdrawn (and that person could be the first successor, the second successor or a subsequent successor).

(6A) Terms used in paragraph (c) of subsection (3) which are defined for the purposes of Schedule 6C have the same meaning in that paragraph as they have in that Schedule (as modified by paragraph 11 of that Schedule).

(6B) Paragraph 10 of Schedule 6C (as modified by paragraph 11 of that Schedule) applies for the purposes of subsection (3)(c) as it applies for the purposes of paragraph 8 of that Schedule.

(7) Terms used in subsection (5A), and in the definition of “the relevant successor” in subsection (6), which are defined for the purposes of paragraph 6I of Schedule 4A have the same meaning in those provisions as they have in that paragraph.

General and Special Commissioners, appeals and other proceedings

Circumstances in which relief for company acquisitions withdrawn

Provision of services through intermediary

Exemption where homeworker’s additional expenses met by employer

PAYE: regulations and notional payments

Gifts with reservation

Mandatory electronic payment

Definition of liabilities and assets of National Loans Fund

SCHEDULE 2A

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), ora 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), ora 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);

(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);

(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

(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

(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, orthe 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, orany 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,

(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

(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).

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,

(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—

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Finance Act 2003

Contract settlements

34E

Application of charities relief

Meaning of “restricted shares”

Losses brought about carelessly or deliberately

31A

First-time buyers

58D

73BA

Sections 71A to 73: first-time buyers

Gifts with reservation

Derivative contracts: transactions within groups

Supplies not known to be taxable when made, etc

Accounts of Consolidated Fund and National Loans Fund

Acquisition by property trader from individual where chain of transactions breaks down

Acquisition by property trader from individual acquiring new dwelling

Debt Management Account: abolition of borrowing cap

Definition of liabilities and assets of National Loans Fund

Schedule 6B

Introduction

1

Transactions to which this Schedule applies

2

Key terms

3

The relief

4

The amount of tax chargeable

5

Adjustment for change of circumstances

6

What counts as a dwelling

7

Transfer of partnership interest pursuant to earlier arrangements

Meaning of “restricted shares”

Liability for tax

Circumstances in which group relief withdrawn

Circumstances in which group relief withdrawn

Circumstances in which group relief withdrawn

Provision of services through intermediary

Consequential amendments

Payroll giving: extension of 10% supplement to 5th April 2004

PAYE: regulations and notional payments

Meaning of “effective date” of a transaction

Circumstances in which relief for company acquisitions withdrawn

Employee securities and options

Approved share plans and schemes

Personal pension arrangements: limit on contributions

Personal pension arrangements: limit on contributions

Authorised unit trusts, OEICs and common investment funds

Exemption for fuel used in recycling processes

Amendments about registration, payment etc

Electricity from renewable sources etc

Ordinary accounts and investment accounts

Mandatory electronic payment

Acquisition by house-building company from individual acquiring new dwelling

Introduction

55A

Acquisitions by certain health service bodies

67A

Adjustment where contingency ceases or consideration is ascertained

Meaning of “effective date” of a transaction

Provision of services through intermediary

Provision of services through intermediary

Provision of services through intermediary

Deferred unascertainable consideration: election for treatment of loss

Gifts with reservation

SCHEDULE 4A

Meaning of “higher threshold interest”

1

Transactions involving a higher threshold interest

2

Amount of tax chargeable: higher rate for certain transactions

3

Acquisitions of interests in the same dwelling through different transactions

4

Businesses of letting, trading in or redeveloping properties

5

Partnerships: application of paragraph 2 to certain transactions