Finance Act 2003

• “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,

• (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, 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);

• (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, 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,

• (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).

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.

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.

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).

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.

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.