Legalize / United Kingdom / Public General Act

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

articles Not indexed

Reform history JSON API

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

Transfer of chargeable interest from a partnership: chargeable consideration including rent

Introduction

Transfer of chargeable interest from a partnership: general

Transfer of partnership interest pursuant to earlier arrangements

Transfer of chargeable interest from a partnership: sum of the lower proportions

Transfer of chargeable interest from a partnership to a partnership

Assents and appropriations by personal representatives

3A

(1) The acquisition of property by a person in or towards satisfaction of his entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge.

(2) Sub-paragraph (1) does not apply if the person acquiring the property gives any consideration for it, other than the assumption of secured debt.

(3) Where sub-paragraph (1) does not apply because of sub-paragraph (2), the chargeable consideration for the transaction is determined in accordance with paragraph 8A(1) of Schedule 4.

(4) In this paragraph—

“debt” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date, and

“secured debt” means debt that, immediately after the death of the deceased person, is secured on the property.

Cases where conditions for exemption not fully met

8A

(1) Where a land transaction would be exempt from charge under paragraph 3A of Schedule 3 (assents and appropriations by personal representatives) but for sub-paragraph (2) of that paragraph (cases where person acquiring property gives consideration for it), the chargeable consideration for the transaction does not include the amount of any secured debt assumed.

“Secured debt” has the same meaning as in that paragraph.

(2) Where a land transaction would be exempt from charge under paragraph 4 of Schedule 3 (variation of testamentary dispositions etc) but for a failure to meet the condition in sub-paragraph (2)(b) of that paragraph (no consideration other than variation of another disposition), the chargeable consideration for the transaction does not include the making of any such variation as is mentioned in that sub-paragraph.

Amounts payable in respect of periods before grant of lease

1A

For the purposes of this Part “rent” does not include any chargeable consideration for the grant of a lease that is payable in respect of a period before the grant of the lease.

Notification of transactions

13

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Interpretation: transfer of chargeable interest to a partnership

1

(1) Where a dwelling (“the old dwelling”) is acquired by a house-building company from an individual (whether alone or with other individuals), the acquisition is exempt from charge if the following conditions are met.

(2) The conditions are—

(a) that the individual (whether alone or with other individuals) acquires from the house-building company a new dwelling,

(b) that the individual—

(i) occupied the old dwelling as his only or main residence at some time in the period of two years ending with the date of its acquisition, and

(ii) intends to occupy the new dwelling as his only or main residence,

(d) that the area of land acquired by the house-building company does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired by the house-building company exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(4) A “house-building company” means a company that carries on the business of constructing or adapting buildings or parts of buildings for use as dwellings.

References in this paragraph to such a company include any company connected with it.

(5) In this paragraph—

(a) references to the acquisition of the new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling;

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and

(c) references to the market value of the old dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

2

(1) Where a dwelling (“the old dwelling”) is acquired by a property trader from an individual (whether alone or with other individuals), the acquisition is exempt from charge if the following conditions are met.

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals who acquire new dwellings from house-building companies,

(b) that the individual (whether alone or with other individuals) acquires a new dwelling from a house-building company,

(i) occupied the old dwelling as his only or main residence at some time in the period of two years ending with the date of its acquisition, and

(ii) intends to occupy the new dwelling as his only or main residence,

(d) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the old dwelling, or

(ii) to grant a lease or licence of the old dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and

(e) that the area of land acquired by the property trader does not exceed the permitted area.

Paragraph (d)(ii) does not apply to the grant of lease or licence to the individual for a period of no more than six months.

(3) Where the conditions in sub-paragraph (2)(a) to (d) are met, but the area of land acquired by the property trader exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(4) The provisions of paragraph 1(4) (meaning of “house-building company” etc) also have effect for the purposes of this paragraph.

(5) In this paragraph—

(a) references to the acquisition of a new dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling;

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and

(c) references to the market value of the old dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

Interpretation: arrangements

3

(1) Where a dwelling is acquired by a property trader from the personal representatives of a deceased individual, the acquisition is exempt from charge if the following conditions are met.

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from personal representatives of deceased individuals,

(b) that the deceased individual occupied the dwelling as his only or main residence at some time in the period of two years ending with the date of his death,

(i) to spend more than the permitted amount on refurbishment of the dwelling, or

(ii) to grant a lease or licence of the dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and

(d) that the area of land acquired does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met, but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and

(b) references to the market value of the dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

4

(1) Where a dwelling (“the old dwelling”) is acquired by a property trader from an individual (whether alone or with other individuals), the acquisition is exempt from charge if—

(a) the individual has made arrangements to sell a dwelling (“the old dwelling”) and acquire another dwelling (“the second dwelling”),

(b) the arrangements to sell the old dwelling fail, and

(c) the acquisition of the old dwelling is made for the purpose of enabling the individual’s acquisition of the second dwelling to proceed,

and the following conditions are met.

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in those circumstances,

(b) that the individual—

(i) occupied the old dwelling as his only or main residence at some time in the period of two years ending with the date of its acquisition, and

(ii) intends to occupy the second dwelling as his only or main residence,

(i) to spend more than the permitted amount on refurbishment of the old dwelling, or

(ii) to grant a lease or licence of the old dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling, and

(d) that the area of land acquired does not exceed the permitted area.

Paragraph (c)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than six months.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met, but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the old dwelling.

(4) In this paragraph—

(a) references to the acquisition of the second dwelling are to the acquisition, by way of grant or transfer, of a major interest in the dwelling;

(b) references to the acquisition of the old dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and

(c) references to the market value of the old dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

5

(1) Where a dwelling is acquired from an individual (whether alone or with other individuals) by his employer, the acquisition is exempt from charge if the following conditions are met.

(2) The conditions are—

(a) that the individual occupied the dwelling as his only or main residence at some time in the period of two years ending with the date of the acquisition,

(b) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,

(d) that the area of land acquired does not exceed the permitted area.

(3) Where the conditions in sub-paragraph (2)(a) to (c) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph “relocation of employment” means a change of the individual’s place of employment due to—

(a) his becoming an employee of the employer,

(b) an alteration of the duties of his employment with the employer, or

(5) For the purposes of this paragraph a change of residence is one “resulting from” relocation of employment if—

(a) the change is made wholly or mainly to allow the individual to have his residence within a reasonable daily travelling distance of his new place of employment, and

(b) his former residence is not within a reasonable daily travelling distance of that place.

The individual’s “new place of employment” means the place where he normally performs, or is normally to perform, the duties of his employment after the relocation.

(6) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling;

(b) references to the market value of the dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area; and

6

(1) Where a dwelling is acquired by a property trader from an individual (whether alone or with other individuals), the acquisition is exempt from charge if the following conditions are met.

(2) The conditions are—

(a) that the acquisition is made in the course of a business that consists of or includes acquiring dwellings from individuals in connection with a change of residence resulting from relocation of employment,

(b) that the individual occupied the dwelling as his only or main residence at some time in the period of two years ending with the date of the acquisition,

(c) that the acquisition is made in connection with a change of residence by the individual resulting from relocation of employment,

(d) that the consideration for the acquisition does not exceed the market value of the dwelling,

(e) that the property trader does not intend—

(i) to spend more than the permitted amount on refurbishment of the dwelling, or

(ii) to grant a lease or licence of the dwelling, or

(iii) to permit any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling, and

(f) that the area of land acquired does not exceed the permitted area.

Paragraph (e)(ii) does not apply to the grant of a lease or licence to the individual for a period of no more than six months.

(3) Where the conditions in sub-paragraph (2)(a) to (e) are met but the area of land acquired exceeds the permitted area, the chargeable consideration for the acquisition is taken to be the amount calculated by deducting the market value of the permitted area from the market value of the dwelling.

(4) In this paragraph “relocation of employment” means a change of the individual’s place of employment due to—

(a) his becoming employed by a new employer,

(b) an alteration of the duties of his employment, or

(5) For the purposes of this paragraph a change of residence is one “resulting from” relocation of employment if—

(a) the change is made wholly or mainly to allow the individual to have his residence within a reasonable daily travelling distance of his new place of employment, and

(b) his former residence is not within a reasonable daily travelling distance of that place.

An individual’s “new place of employment” means the place where he normally performs, or is normally to perform, the duties of his employment after the relocation.

(6) In this paragraph—

(a) references to the acquisition of the dwelling are to the acquisition, by way of transfer, of a major interest in the dwelling; and

(b) references to the market value of the dwelling and of the permitted area are, respectively, to the market value of that major interest in the dwelling and of that interest so far as it relates to that area.

7

(1) “Dwelling” includes land occupied and enjoyed with the dwelling as its garden or grounds.

(2) A building or part of a building is a “new dwelling”if—

(a) it has been constructed for use as a single dwelling and has not previously been occupied, or

(b) it has been adapted for use as a single dwelling and has not been occupied since its adaptation.

(3) “The permitted area”, in relation to a dwelling, means land occupied and enjoyed with the dwelling as its garden or grounds that does not exceed—

(a) an area (inclusive of the site of the dwelling) of 0.5 of a hectare, or

(b) such larger area as is required for the reasonable enjoyment of the dwelling as a dwelling having regard to its size and character.

(4) Where sub-paragraph (3)(b) applies, the permitted area is taken to consist of that part of the land that would be the most suitable for occupation and enjoyment with the dwelling as its garden or grounds if the rest of the land were separately occupied.

8

(1) A “property trader” means—

(a) a company,

(b) a limited liability partnership, or

that carries on the business of buying and selling dwellings.

(2) In relation to a property trader a “principal” means—

(a) in the case of a company, a director;

(b) in the case of a limited liability partnership, a member;

(c) in the case of a partnership whose members are all either companies or limited liability partnerships, a member or a person who is a principal of a member.

(3) For the purposes of this Schedule—

(a) anything done by or in relation to a company connected with a property trader is treated as done by or in relation to that property trader, and

(b) references to the principals or employees of a property trader include the principals or employees of any such company.

9

(1) “Refurbishment”of a dwelling means the carrying out of works that enhance or are intended to enhance the value of the dwelling, but does not include—

(a) cleaning the dwelling, or

(b) works required solely for the purpose of ensuring that the dwelling meets minimum safety standards.

(2) The “permitted amount”, in relation to the refurbishment of a dwelling, is—

(a) 10,000, or

(b) 5% of the consideration for the acquisition of the dwelling,

whichever is the greater, but subject to a maximum of £20,000.

10

Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this Schedule.

11

(1) Relief under this Schedule is withdrawn in the following circumstances.

(2) Relief under paragraph 2 (acquisition by property trader from individual acquiring new dwelling) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the old dwelling, or

(b) grants a lease or licence of the old dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling.

Paragraph (b) does not apply to the grant of lease or licence to the individual for a period of no more than six months.

(3) Relief under paragraph 3 (acquisition by property trader from personal representatives) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the dwelling, or

(b) grants a lease or licence of the dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling.

(4) Relief under paragraph 4 (acquisition by property trader from individual where chain of transactions breaks down) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the old dwelling, or

(b) grants a lease or licence of the old dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the old dwelling.

Paragraph (b) does not apply to the grant of lease or licence to the individual for a period of no more than six months.

(5) Relief under paragraph 6 (acquisition by property trader in case of relocation of employment) is withdrawn if the property trader—

(a) spends more than the permitted amount on refurbishment of the dwelling, or

(b) grants a lease or licence of the dwelling, or

(c) permits any of its principals or employees (or any person connected with any of its principals or employees) to occupy the dwelling.

Paragraph (b) does not apply to the grant of lease or licence to the individual for a period of no more than six months.

(6) Where relief is withdrawn the amount of tax chargeable is the amount that would have been chargeable in respect of the acquisition but for the relief.

Cases where first condition not fully met

3

(1) This paragraph applies where—

(a) a land transaction is not exempt from charge under paragraph 1 because the first condition in that paragraph is not met, but

(b) the purchaser (“C”) intends to hold the greater part of the subject-matter of the transaction for qualifying charitable purposes.

(2) In such a case—

(a) the transaction is exempt from charge, but

(b) for the purposes of paragraph 2 (withdrawal of charities relief) “disqualifying event” includes—

(i) any transfer by C of a major interest in the whole or any part of the subject-matter of the transaction, or

(ii) any grant by C at a premium of a low-rental lease of the whole or any part of that subject-matter,

that is not made in furtherance of the charitable purposes of C.

(3) For the purposes of sub-paragraph (2)(b)(ii)—

(a) a lease is granted “at a premium” if there is consideration other than rent, and

(b) a lease is a “low-rental”lease if the annual rent (if any) is less than £1,000 a year.

(4) In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 2—

(a) the date of the event for those purposes is the effective date of the transaction;

(b) paragraph 2 has effect as if—

(i) in sub-paragraph (1)(b), for “at the time of” there were substituted “ immediately before ”,

(ii) in sub-paragraph (4)(a), for “at the time of” there were substituted “ immediately before and immediately after ”, and

(iii) sub-paragraph (4)(b) were omitted.

(5) In this paragraph—

“qualifying charitable purposes” has the same meaning as in paragraph 1;

“rent” has the same meaning as in Schedule 5 (amount of tax chargeable: rent) and “annual rent” has the same meaning as in paragraph 9A of that Schedule.

Charitable trusts

4

(1) This Schedule applies in relation to a charitable trust as it applies in relation to a charity.

(2) In this paragraph “charitable trust” means—

(a) a trust of which all the beneficiaries are charities, or

(b) a unit trust scheme in which all the unit holders are charities,

...

(3) In this Schedule as it applies by virtue of this paragraph—

(a) references in paragraph 1(3A) to the charitable purposes of C are to those of the beneficiaries or unit holders, or any of them;

(b) the references to the purchaser in paragraph 2(3)(a), and to C in paragraph 3B(4)(a), are to any of the beneficiaries or unit holders;

(c) the references in paragraphs 3(2)(b) and 3C(3) to the charitable purposes of C are to those of the beneficiaries or unit holders, or any of them.

Shared ownership lease: treatment of staircasing transaction

4A

(1) This paragraph applies where under a shared ownership lease—

(a) the lessee or lessees have the right, on the payment of a sum, to require the terms of the lease to be altered so that the rent payable under it is reduced, and

(b) by exercising that right the lessee or lessees acquire an interest, additional to one already held, calculated by reference to the market value of the dwelling and expressed as a percentage of the dwelling or its value (a “share of the dwelling”).

(2) Such an acquisition is exempt from charge if—

(a) an election was made for tax to be charged in accordance with paragraph 2 or, as the case may be, paragraph 4 and any tax chargeable in respect of the grant of the lease has been paid, or

(b) immediately after the acquisition the total share of the dwelling held by the lessee or lessees does not exceed 80%.

(3) In this paragraph “shared ownership lease” means a lease granted—

(a) by a qualifying body, or

(b) in pursuance of the preserved right to buy,

in relation to which the conditions in paragraph 2(2) or 4(2) are met.

(4) Section 118 (meaning of “market value”) does not apply in relation to the references in this paragraph to the market value of the dwelling.

SCHEDULE 11A

Introductory

1

This Schedule applies to a claim under any provision of this Part other than a claim that is required to be made in, or by amendment to, a return under this Part. References in this Schedule to a claim shall be read accordingly.

Making of claims

2

(1) A claim must be made in such form as the Inland Revenue may determine.

(2) The form of claim must provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the claimant’s information and belief.

(3) The form of claim may require—

(a) a statement of the amount of tax that will be required to be discharged or repaid in order to give effect to the claim;

(b) such information as is reasonably required for the purpose of determining whether and, if so, the extent to which the claim is correct;

(c) the delivery with the claim of such statements and documents, relating to the information contained in the claim, as are reasonably required for the purpose mentioned in paragraph (b).

(4) A claim for repayment of tax may not be made unless the claimant has documentary evidence that the tax has been paid.

Duty to keep and preserve records

3

(1) A person who may wish to make a claim must—

(a) keep such records as may be needed to enable him to make a correct and complete claim, and

(b) preserve those records in accordance with this paragraph.

(2) The records must be preserved until the latest of the following times—

(a) the end of the period of twelve months beginning with day on which the claim was made;

(b) where there is an enquiry into the claim, or into an amendment of the claim, the time when the enquiry is completed;

(c) where the claim is amended and there is there is no enquiry into the amendment, the time when the Inland Revenue no longer have power to enquire into the amendment.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4A) The Commissioners for Her Majesty's Revenue and Customs may by regulations—

(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and

(b) provide that those records include supporting documents so specified.

(4B) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).

(4C) Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.

(5) A person who fails to comply with this paragraph in relation to a claim that he makes is liable to a penalty not exceeding £3,000, subject to the following exception.

(6) No penalty is incurred if the Inland Revenue are satisfied that any facts that they reasonably require to be proved, and that would have been proved by the records, are proved by other documentary evidence provided to them.

Amendment of claim by claimant

4

(1) The claimant may amend his claim by notice to the Inland Revenue.

(2) No such amendment may be made—

(a) more than twelve months after the day on which the claim was made, or

(b) if the Inland Revenue give notice under paragraph 7 (notice of enquiry), during the period—

(i) beginning with the day on which notice is given, and

(ii) ending with the day on which the enquiry under that paragraph is completed.

Correction of claim by Revenue

5

(1) The Inland Revenue may by notice to the claimant amend a claim so as to correct obvious errors or omissions in the claim (whether errors of principle, arithmetical mistakes or otherwise).

(2) No such correction may be made—

(a) more than nine months after the day on which the claim was made, or

(b) if the Inland Revenue give notice under paragraph 7 (notice of enquiry), during the period—

(i) beginning with the day on which notice is given, and

(ii) ending with the day on which the enquiry under that paragraph is completed.

(3) A correction under this paragraph is of no effect if, within three months from the date of issue of the notice of correction, the claimant gives notice rejecting the correction.

(4) Notice under sub-paragraph (3) must be given to the officer of the Board by whom the notice of correction was given.

Giving effect to claims and amendments

6

(1) As soon as practicable after a claim is made, or is amended under paragraph 4 or 5, the Inland Revenue shall give effect to the claim or amendment by discharge or repayment of tax.

(2) Where the Inland Revenue enquire into a claim or amendment—

(a) sub-paragraph (1) does not apply until a closure notice is given under paragraph 11 (completion of enquiry), and then it applies subject to paragraph 13 (giving effect to amendments under paragraph 11), but

(b) the Inland Revenue may at any time before then give effect to the claim or amendment, on a provisional basis, to such extent as they think fit.

Notice of enquiry

7

(1) The Inland Revenue may enquire into a person’s claim or amendment of a claim if they give him notice of their intention to do so (“notice of enquiry”) before the end of the period of nine months after the day on which the claim or amendment was made.

(2) A claim or amendment that has been the subject of one notice of enquiry may not be the subject of another.

Notice to produce documents etc for purposes of enquiry

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeal against notice to produce documents etc

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty for failure to produce documents etc

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Completion of enquiry

11

(1) An enquiry under paragraph 7 is completed when the Inland Revenue by notice (a “closure notice”) inform the purchaser that they have completed their enquiries and state their conclusions.

(2) A closure notice must either—

(a) state that in the opinion of the Inland Revenue no amendment of the claim is required, or

(b) if in the Inland Revenue’s opinion the claim is insufficient or excessive, amend the claim so as to make good or eliminate the deficiency or excess.

In the case of an enquiry into an amendment of a claim, paragraph (b) applies only so far as the deficiency or excess is attributable to the amendment.

(3) A closure notice takes effect when it is issued.

Direction to complete enquiry

12

(1) The claimant may apply to the tribunal for a direction that the Inland Revenue give a closure notice within a specified period.

(2) Any such application is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).

(3) The tribunal shall give a direction unless ... satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.

Giving effect to amendments under paragraph 11

13

(1) Within 30 days after the date of issue of a notice under paragraph 11(2)(b) (closure notice that amends claim), the Inland Revenue shall give effect to the amendment by making such adjustment as may be necessary, whether—

(a) by way of assessment on the claimant, or

(b) by discharge or repayment of tax.

(2) An assessment made under sub-paragraph (1) is not out of time if it is made within the time mentioned in that sub-paragraph.

Appeals against amendments under paragraph 11

14

(1) An appeal may be brought against a conclusion stated or amendment made by a closure notice.

(2) Notice of the appeal must be given—

(a) in writing,

(b) within 30 days after the date on which the closure notice was issued,

(3) The notice of appeal must specify the grounds of appeal.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Paragraphs 36A to 37 , 44 and 45 of Schedule 10 ... applies in relation to an appeal under this paragraph as they apply in relation to an appeal under paragraph 35 of that Schedule.

(6) On an appeal against an amendment made by a closure notice, the tribunal may vary the amendment appealed against whether or not the variation is to the advantage of the appellant.

(7) Where any such amendment is varied, whether by the tribunal or by the order of a court, paragraph 13 (giving effect to amendments under paragraph 11) applies (with the necessary modifications) in relation to the variation as it applied in relation to the amendment.

Jurisdiction of Commissioners

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer of chargeable interest from a partnership to a partnership

Reallocation of trust property as between beneficiaries

Transactions that are not notifiable

Interpretation: transfer of chargeable interest to a partnership

15

(1) A lease held as partnership property immediately after a transfer of an interest in the partnership is not relevant partnership property for the purposes of paragraph 14(5) or (5A) if the following four conditions are met.

(2) The first condition is that—

(a) no chargeable consideration other than rent has been given in respect of the grant of the lease, and

(b) no arrangements are in place at the time of the transfer for any chargeable consideration other than rent to be given in respect of the grant of the lease.

(3) The second condition is that the rent payable under the lease as granted was a market rent at the time of the grant.

(4) The third condition is that—

(a) the term of the lease is 5 years or less, or

(b) if the term of the lease is more than 5 years—

(i) the lease provides for the rent payable under it to be reviewed at least once in every 5 years of the term, and

(ii) the rent payable under the lease as a result of a review is required to be a market rent at the review date.

(5) The fourth condition is that there has been no change to the lease since it was granted which is such that, immediately after the change has effect, the rent payable under the lease is less than a market rent.

(6) The market rent of a lease at any time is the rent which the lease might reasonably be expected to fetch at that time in the open market.

(7) A review date is a date from which the rent determined as a result of a rent review is payable.

16

(1) Where paragraph 5 of Schedule 4 (exchanges) applies to the acquisition of an interest in a partnership in consideration of entering into a land transaction with an existing partner, the interest in the partnership shall be treated as a major interest in land for the purposes of that paragraph if the relevant partnership property includes a major interest in land.

(2) In sub-paragraph (1) “relevant partnership property” has the meaning given by paragraph 14(5) or (5A) (as appropriate).

(3) The provisions of paragraph 6 of Schedule 4 (partition etc: disregard of existing interest) do not apply where this paragraph applies.

17

(1) This paragraph applies where—

(a) there is a transfer of a chargeable interest to a partnership (“the land transfer”);

(b) the land transfer falls within paragraph (a), (b) or (c) of paragraph 10(1);

(d) the partnership transfer is made—

(i) if the land transfer falls within paragraph 10(1)(a) or (b), by the person who makes the land transfer;

(ii) if the land transfer falls within paragraph 10(1)(c), by the partner concerned;

(e) the partnership transfer is made pursuant to arrangements that were in place at the time of the land transfer;

(f) the partnership transfer is not (apart from this paragraph) a chargeable transaction.

(2) The partnership transfer—

(a) shall be taken for the purposes of this Part to be a land transaction;

(b) is a chargeable transaction.

(3) The partners shall be taken to be the purchasers under the transaction.

(4) The chargeable consideration for the transaction shall be taken to be equal to a proportion of the market value, as at the date of the transaction, of the interest transferred by the land transfer.

(5) That proportion is—

(a) if the person making the partnership transfer is not a partner immediately after the transfer, his partnership share immediately before the transfer;

(b) if he is a partner immediately after the transfer, the difference between his partnership share before and after the transfer.

(6) The partnership transfer and the land transfer shall be taken to be linked transactions.

(7) Paragraphs 6 to 8 (responsibility of partners) have effect in relation to the partnership transfer, but the responsible partners are—

(a) those who were partners immediately before the transfer and who remain partners after the transfer, and

(b) any person becoming a partner as a result of, or in connection with, the transfer.

18

(1) This paragraph applies where a chargeable interest is transferred—

(a) from a partnership to a person who is or has been one of the partners, or

(b) from a partnership to a person connected with a person who is or has been one of the partners.

(2) The chargeable consideration for the transaction shall (subject to paragraph 24) be taken to be equal to—

$$MV×(100-SLP)%$where— MV is the market value of the interest transferred, and SLP is the sum of the lower proportions.$

(5) Paragraph 20 provides for determining the sum of the lower proportions.

(6) Paragraph 19 applies ... if the whole or part of the chargeable consideration for the transaction is rent.

(7) For the purposes of this paragraph property that was partnership property before the partnership was dissolved or otherwise ceased to exist shall be treated as remaining partnership property until it is distributed.

(8) This paragraph has effect subject to any election under paragraph 12A.

Transfer of partnership interest pursuant to earlier arrangements

19

(1) This paragraph applies in relation to a transaction to which paragraph 18 applies where the whole or part of the chargeable consideration for the transaction is rent.

(2) Schedule 5 (amount of tax chargeable: rent) has effect with the modifications set out in sub-paragraphs (2A) to (2C).

(2A) In paragraph 2—

(a) for “the net present value of the rent payable over the term of the lease” substitute “ the relevant chargeable proportion of the net present value of the rent payable over the term of the lease ”, and

(b) for “the net present values of the rent payable over the terms of all the leases” substitute “ the relevant chargeable proportions of the net present values of the rent payable over the terms of all the leases ”.

(2B) In paragraph 9A(6) —

(a) for “the annual rent” substitute “ the relevant chargeable proportion of the annual rent ”, and

(b) for “the total of the annual rents” substitute “ the relevant chargeable proportion of the total of the annual rents ”.

(2C) For paragraph 9(4) substitute—

(4) Tax chargeable under this Schedule is in addition to any tax chargeable under section 55 or 74(1A) or Schedule 4A ... as they have effect by virtue of paragraph 18 of Schedule 15.

(2D) For the purposes of sub-paragraphs (2A) and (2B) the relevant chargeable proportion is—

$$(100-SLP)%$where SLP is the sum of the lower proportions.$

(8) Paragraph 20 provides for determining the sum of the lower proportions.

(9) This paragraph is subject to paragraph 24.

Interpretation: transfer of chargeable interest to a partnership

20

(1) The sum of the lower proportions in relation to a transaction to which paragraph 18 applies is determined as follows:—

Step OneIdentify the relevant owner or owners.A person is a relevant owner if—immediately after the transaction, he is entitled to a proportion of the chargeable interest, andimmediately before the transaction, he was a partner or connected with a partner.

Step TwoFor each relevant owner, identify the corresponding partner or partners.A person is a corresponding partner in relation to a relevant owner if, immediately before the transaction—he was a partner, andhe was the relevant owner or was an individual connected with the relevant owner. (If there is no relevant owner with a corresponding partner, the sum of the lower proportions is nil.)

Step ThreeFor each relevant owner, find the proportion of the chargeable interest to which he is entitled immediately after the transaction.Apportion that proportion between any one or more of the relevant owner’s corresponding partners.

Step FourFind the lower proportion for each person who is a corresponding partner in relation to one or more relevant owners.The lower proportion is—the proportion of the chargeable interest attributable to the partner, orif lower, the partnership share attributable to the partner.The proportion of the chargeable interest attributable to the partner is—if he is a corresponding partner in relation to only one relevant owner, the proportion (if any) of the chargeable interest apportioned to him (at Step Three) in respect of that owner;if he is a corresponding partner in relation to more than one relevant owner, the sum of the proportions (if any) of the chargeable interest apportioned to him (at Step Three) in respect of each of those owners.Paragraph 21 provides for determining the partnership share attributable to the partner.

Step FiveAdd together the lower proportions of each person who is a corresponding partner in relation to one or more relevant owners.The result is the sum of the lower proportions.

(2) For the purposes of this paragraph persons who are entitled to a chargeable interest as beneficial joint tenants ... shall be taken to be entitled to the chargeable interest as beneficial tenants in common ... in equal shares.

(3) For the purpose of paragraph (b) of Step 2 a company is to be treated as an individual connected with the relevant owner in so far as it—

(a) holds property as trustee, and

(b) is connected with the relevant owner only because of section 1122(6) of the Corporation Tax Act 2010.

21

(1) This paragraph provides for determining the partnership share attributable to a partner for the purposes of paragraph 20 (1) (see Step Four).

(2) Paragraph 22 applies for determining the partnership share attributable to a partner where—

(a) the effective date of the transfer of the relevant chargeable interest to the partnership was before 20th October 2003, or

(b) the effective date of the transfer of the relevant chargeable interest to the partnership was on or after that date and—

(i) the instrument by which the transfer was effected has been duly stamped with ad valorem stamp duty, or

(ii) any tax payable in respect of the transfer has been duly paid under this Part.

(3) Where the effective date of the transfer of the relevant chargeable interest to the partnership was on or after 20th October 2003 but neither of the conditions in sub-paragraphs (i) and (ii) of sub-paragraph (2)(b) is met, the partnership share attributable to the partner is zero.

(4) The relevant chargeable interest is—

(a) the chargeable interest which ceases to be partnership property as a result of the transaction to which paragraph 18 applies, or

(b) where the transaction to which paragraph 18 applies is the grant or creation of a chargeable interest, the chargeable interest out of which that interest is granted or created.

22

(1) Where this paragraph applies, the partnership share attributable to the partner is determined as follows:—

Step One

Find the partner’s actual partnership share on the relevant date.

In a case falling within paragraph 21(2)(a), the relevant date—

(a) if the partner was a partner on 19th October 2003, is that date;

(b) if the partner became a partner after that date, is the date on which he became a partner.

In a case falling within paragraph 21(2)(b), the relevant date—

(a) if the partner was a partner on the effective date of the transfer of the relevant chargeable interest to the partnership, is that date;

(b) if the partner became a partner after that date, is the date on which he became a partner.

Step Two

Add to that partnership share any increases in the partner’s partnership share which—

(a) occur in the period starting on the day after the relevant date and ending immediately before the transaction to which paragraph 18 applies, and

(b) count for this purpose.

The result is the increased partnership share.

An increase counts for the purpose of paragraph (b) only if—

(i) where the transfer which resulted in the increase took place on or before the date on which the Finance Act 2004 was passed, the instrument by which the transfer was effected has been duly stamped with ad valorem stamp duty under the enactments relating to stamp duty;

(ii) where the transfer which resulted in the increase took place after that date, any tax payable in respect of the transfer has been duly paid under this Part.

Step Three

Deduct from the increased partnership share any decreases in the partner’s partnership share which occur in the period starting on the day after the relevant date and ending immediately before the transaction to which paragraph 18 applies.

The result is the partnership share attributable to the partner.

(2) If the effect of applying Step Three would be to reduce the partnership share attributable to the partner below zero, the partnership share attributable to the partner is zero.

(3) In a case falling within paragraph 21(2)(a), if the partner ceased to be a partner before 19th October 2003, the partnership share attributable to the partner is zero.

(4) In a case falling within paragraph 21(2)(b), if the partner ceased to be a partner before the effective date of the transfer of the relevant chargeable interest to the partnership, the partnership share attributable to the partner is zero.

(5) Paragraph 21(4) (relevant chargeable interest) applies for the purposes of this paragraph.

Reallocation of trust property as between beneficiaries

23

(1) This paragraph applies where—

(a) there is a transfer of a chargeable interest from a partnership to a partnership, and

(b) the transfer is both—

(i) a transaction to which paragraph 10 applies, and

(ii) a transaction to which paragraph 18 applies.

(2) Paragraphs 10(2) and 18(2) do not apply.

(2A) The chargeable consideration for the transaction shall be taken to be what it would have been if paragraph 10(2) had applied or, if greater, what it would have been if paragraph 18(2) had applied.

(3) Where the whole or part of the chargeable consideration for the transaction is rent—

(a) paragraphs 11 and 19 do not apply;

(b) the tax chargeable in respect of so much of the chargeable consideration as consists of rent shall be taken to be what it would have been if paragraph 11 had applied or, if greater, what it would have been if paragraph 19 had applied;

(i) it would have had effect if paragraph 11(2B) of this Schedule had applied, or

(ii) it would have had effect if paragraph 19(2B) of this Schedule had applied.

24

(1) This paragraph applies where—

(a) there is a transaction to which paragraph 18 applies;

(b) immediately before the transaction all the partners are bodies corporate;

(2) Paragraphs 18, 19 and 23 have effect with these modifications.

(3) In paragraph 18, for sub-paragraphs (2) and (5) substitute—

(2) The chargeable consideration for the transaction shall be taken to be equal to the market value of the interest transferred.

(4A) In paragraph 19(2), for “sub-paragraphs (2A) to (2C)” substitute “ sub-paragraph (2C) ”.

(5) In paragraph 19, omit sub-paragraphs (2A), (2B), (2D) and (8).

(9) Paragraph 20 provides for determining the sum of the lower proportions.

Application of disadvantaged areas relief

25

(1) Where paragraph 10, 14, 17 or 18 applies, paragraph 1 of Schedule 3 (exemption of transactions for which there is no chargeable consideration) does not apply.

(2) But (subject to paragraphs 27 and 28 ) this Part of this Schedule has effect subject to any other provision affording exemption or relief from stamp duty land tax.

26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of group relief

27

(1) Part 1 of Schedule 7 (group relief) applies to—

(a) a transaction to which paragraph 10 applies, and

(b) a transaction that is a chargeable transaction by virtue of paragraph 17,

with these modifications.

(2) In paragraph 3(1)(a), for “the purchaser” substitute “ a partner who was a partner at the effective date of the relevant transaction (“the relevant partner”) ”.

(3) In paragraph 3(1), for paragraph (b) substitute—

(b) at the time the relevant partner ceases to be a member of the same group as the vendor (“the relevant time”), a chargeable interest is held by or on behalf of the members of the partnership and that chargeable interest— (i) was acquired by or on behalf of the partnership under the relevant transaction, or (ii) is derived from a chargeable interest so acquired, and has not subsequently been acquired at market value under a chargeable transaction for which group relief was available but was not claimed,

(4) In paragraph 3(3), for the words from “the transferee company” to the end substitute “ or on behalf of the partnership and to the proportion in which the relevant partner is entitled at the relevant time to share in the income profits of the partnership. ”.

(5) In paragraph 3(4), omit the definition of “relevant associated company”.

(6) In paragraphs 4 to 6, for “the purchaser” (wherever appearing) substitute “ the relevant partner ”.

Application of charities relief

28

(1) Schedule 8 (charities relief) applies to the transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 or 17 with these modifications.

(2) In paragraph 1(1), for “A land transaction is exempt from charge if the purchaser is a charity” substitute “ A transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 or 17 of Schedule 15 is exempt from charge if the transferee is a charity ”.

(3) In paragraph 1(2)—

(a) for “the purchaser must intend to hold the subject-matter of the transaction” substitute “ every chargeable interest held as partnership property immediately after the transfer must be held ”;

(b) in paragraphs (a) and (b) for “the purchaser” substitute “ the transferee ”.

(4) In paragraph 1(3) for “the purchaser” substitute “ the transferee ”.

(5) In paragraph 2(1), for paragraph (b) substitute—

(b) at the time of the disqualifying event the partnership property includes a chargeable interest— (i) that was held as partnership property immediately after the relevant transaction, or (ii) that is derived from an interest held as partnership property at that time,

(6) In paragraph 2(3)(a), for “the purchaser” substitute “ the transferee ”.

(7) In paragraph 2(3), for paragraph (b) substitute—

(b) any chargeable interest held as partnership property immediately after the relevant transaction, or any interest or right derived from it, being used or held otherwise than for qualifying charitable purposes.

(8) For paragraph 2(4) substitute—

(4) In sub-paragraphs (1) and (2) an “appropriate proportion” means an appropriate proportion having regard to— (a) the chargeable interests held as partnership property immediately after the relevant transaction and the chargeable interests held as partnership property at the time of the disqualifying event, and (b) the extent to which any chargeable interest held as partnership property at that time becomes used or held for purposes other than qualifying charitable purposes.

(9) After paragraph 2 insert—

(3) (1) There is a transfer of an interest in a partnership for the purposes of this Schedule if there is such a transfer for the purposes of Part 3 of Schedule 15 (see paragraph 36 of that Schedule). (2) Paragraph 34 (1) of Schedule 15 (meaning of references to partnership property) applies for the purposes of this Schedule as it applies for the purposes of Part 3 of that Schedule.

Transactions that are not notifiable

29

Except as provided by—

(a) paragraph 10 (transfer of chargeable interest to a partnership), or

(b) paragraph 14 (transfer of partnership interest: consideration given and chargeable interest held), or

the acquisition of an interest in a partnership is not a chargeable transaction, notwithstanding that the partnership property includes land.

30

(1) A transaction which is a chargeable transaction by virtue of paragraph 14 or 17 (transfer of partnership interest) is a notifiable transaction if (but only if) the consideration for the transaction exceeds the zero rate threshold.

(2) The consideration for a transaction exceeds the zero rate threshold if one or more of the following conditions are met—

(a) the relevant consideration for the purposes of section 55 (amount of tax chargeable: general) is such that the amount of tax chargeable under that section is not zero;

(aa) paragraph 3 of Schedule 4A applies to the transaction;

(b) the relevant rental value for the purposes of Schedule 5 (amount of tax chargeable: rent) is such that the rate of tax chargeable under that Schedule is 1% or higher.

31

(1) Nothing in section 125 (abolition of stamp duty except in relation to stock or marketable securities), or in Part 2 of Schedule 20 (amendments and repeals consequential on that section) or in Schedule 24 to the Finance Act 2014 (abolition of stamp duty in relation to certain securities), affects the application of the enactments relating to stamp duty in relation to an instrument by which a transfer of an interest in a partnership is effected.

(2) In Part 1 of Schedule 20 (provisions supplementing section 125) references to stock or marketable securities shall be read as including any property that is the subject-matter of a transaction by which an interest in a partnership is transferred.

(3) In their application in relation to an instrument by which a transfer of an interest in a partnership is effected, the enactments relating to stamp duty have effect subject to paragraphs 32 and 33.

32

(1) This paragraph applies where—

(a) stamp duty under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) is chargeable on an instrument effecting a transfer of an interest in a partnership, and

(b) the relevant partnership property includes a chargeable interest.

(2) The “relevant partnership property”, in relation to a transfer of an interest in a partnership, is every chargeable interest held as partnership property immediately after the transfer, other than any interest that was transferred to the partnership in connection with the transfer.

(3) The consideration for the transaction shall (subject to sub-paragraph (8)) be taken to be equal to the actual consideration for the transaction less the excluded amount.

(4) The excluded amount is a proportion of the net market value of the relevant partnership property immediately after the transfer.

(5) That proportion is—

(a) if the person acquiring the interest in the partnership was not a partner before the transfer, his partnership share immediately after the transfer;

(b) if he was a partner before the transfer, the difference between his partnership share before and after the transfer.

(6) The net market value of a chargeable interest at a particular date is—

$$MV-SL$where— MV is the market value of the chargeable interest at that date, andSL is the amount outstanding at that date on any loan secured solely on the chargeable interest.$

(7) If, in relation to a chargeable interest, SL is greater than MV, the net market value of the chargeable interest shall be taken to be nil.

(8) If the excluded amount is greater than the actual consideration for the transaction, the consideration for the transaction shall be taken to be nil.

(9) Where this paragraph applies in relation to an instrument, the instrument shall not be regarded as duly stamped unless it has been stamped in accordance with section 12 of the Stamp Act 1891.

33

(1) This paragraph applies where stamp duty under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) is, apart from this paragraph, chargeable on an instrument effecting a transfer of an interest in a partnership.

(1A) If the relevant partnership property does not include any relevant securities, no stamp duty shall (subject to sub-paragraph (8)) be chargeable on the instrument.

(3) If the relevant partnership property includes relevant securities, the stamp duty chargeable on the instrument shall not exceed the stamp duty that would be chargeable if—

(a) the instrument were an instrument effecting a transfer of ... those securities, and

(b) the consideration for the transfer were equal to the appropriate proportion of the net market value of ... those securities immediately after the transfer.

(3A) The “relevant partnership property”, in relation to a transfer of an interest in a partnership, is the partnership property immediately after the transfer, other than any partnership property that was transferred to the partnership in connection with the transfer.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The appropriate proportion is—

(a) if the person acquiring the interest in the partnership was not a partner before the transfer, his partnership share immediately after the transfer;

(b) if he was a partner before the transfer, the difference between his partnership share before and after the transfer.

(6) The net market value of relevant securities at a particular date is—

$$MV-SL$where— MV is the market value of the relevant securities at that date, andSL is the amount outstanding at that date on any loan secured solely on the relevant securities.$

(7) If, in relation to any relevant securities, SL is greater than MV, the net market value of the relevant securities shall be taken to be nil.

(8) Where this paragraph applies in relation to an instrument, the instrument shall not be regarded as duly stamped unless it has been stamped in accordance with section 12 of the Stamp Act 1891.

(8A) In this paragraph “relevant securities” means stock or marketable securities other than any stock or marketable securities admitted to trading on a recognised growth market but not listed on any market.

(9) This paragraph shall be construed as one with the Stamp Act 1891.

Interpretation: transfer of chargeable interest to a partnership

34

(1) Any reference in this Part of this Schedule to partnership property is to an interest or right held by or on behalf of a partnership, or the members of a partnership, for the purposes of the partnership business.

(2) Any reference in this Part of this Schedule to a person’s partnership share at any time is to the proportion in which he is entitled at that time to share in the income profits of the partnership.

35

For the purposes of this Part of this Schedule, there is a transfer of a chargeable interest to a partnership in any case where a chargeable interest becomes partnership property.

36

For the purposes of this Part of this Schedule, where a person acquires or increases a partnership share there is a transfer of an interest in the partnership (to that partner and from the other partners).

37

For the purposes of this Part of this Schedule, there is a transfer of a chargeable interest from a partnership in any case where—

(a) a chargeable interest that was partnership property ceases to be partnership property, or

(b) a chargeable interest is granted or created out of partnership property and the interest is not partnership property.

38

(1) This paragraph applies in relation to a lease for the purposes of this Part of this Schedule if—

(a) the grant of the lease is or was a transaction to which paragraph 10 applies or applied (or a transaction to which paragraph 10 would have applied if that paragraph had been in force at the time of the grant), or

(b) the grant of the lease is a transaction to which paragraph 18 applies.

(2) In determining the market value of the lease, an obligation of the tenant under the lease is to be taken into account if (but only if)—

(a) it is an obligation such as is mentioned in paragraph 10 (1) of Schedule 17A, or

(b) it is an obligation to make a payment to a person.

39

(1) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this Part of this Schedule.

(2) As applied by sub-paragraph (1), that section has effect with the omission of subsection (7) (partners connected with each other).

(3) As applied by sub-paragraph (1) for the purposes of paragraph 12 or 20, that section has effect with the omission of subsection (6)(c) to (e) (trustee connected with settlement).

Meaning of “lease”

40

In this Part of this Schedule “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

First rent review in final quarter of fifth year

7A

Where—

(a) a lease contains provision under which the rent may be adjusted,

(b) under that provision the first (or only) such adjustment—

(i) is to an amount that (before the adjustment) is uncertain, and

(ii) has effect from a date (the “review date”) that is expressed as falling five years after a specified date,

and

this Schedule has effect as if references to the first five years of the term of the lease were to the period beginning with the start of the term of the lease and ending with the review date. References to the fifth year of the term of the lease shall be read accordingly.

Agreement for lease

12A

(1) This paragraph applies where ...—

(a) an agreement for a lease is entered into, and

(b) the agreement is substantially performed without having been completed.

(2) The agreement is treated as if it were the grant of a lease in accordance with the agreement (“the notional lease”), beginning with the date of substantial performance.

The effective date of the transaction is that date.

(3) Where a lease (“the actual lease”) is subsequently granted in pursuance of the agreement, the notional lease is to be treated for the purposes of this Part as if it were a lease granted—

(a) on the date the agreement was substantially performed,

(b) for a term which begins with that date and ends at the end of the term of the actual lease, and

(c) in consideration of the total rent payable over that term and any other consideration given for the notional lease or the actual lease.

(3A) Where sub-paragraph (3) applies the grant of the actual lease is disregarded for the purposes of this Part except section 81A (return or further return in consequence of later linked transaction).

(3B) For the purposes of section 81A—

(a) the grant of the notional lease and the grant of the actual lease are linked (whether or not they would be linked by virtue of section 108),

(b) the lessee under the actual lease (rather than the lessee under the notional lease) is liable for any tax or additional tax payable in respect of the notional lease as a result of sub-paragraph (3), and

(c) the reference in section 81A(1)(a) to “the purchaser under the earlier transaction” is to be read, in relation to the notional lease, as a reference to the lessee under the actual lease.

(4) Where sub-paragraph (1) applies and the agreement is (to any extent) afterwards rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of that sub-paragraph shall (to that extent) be repaid by the Inland Revenue.

Repayment must be claimed by amendment of the land transaction return made in respect of the agreement.

(5) In this paragraph “substantially performed” and “completed” have the same meanings as in section 44 (contract and conveyance).

Assignment of agreement for lease

12B

(1) This paragraph applies, in place of Schedule 2A (transactions entered into before completion of contract), where ... a person assigns his interest as lessee under an agreement for a lease.

(2) If the assignment occurs without the agreement having been substantially performed, section 44 (contract and conveyance) has effect as if—

(a) the contract were with the assignee and not the assignor, and

(b) the consideration given by the assignee for entering into the contract included any consideration given by him for the assignment.

(3) If the assignment occurs after the agreement has been substantially performed—

(a) the assignment is a separate land transaction, and

(b) the effective date of that transaction is the date of the assignment.

(4) Where there are successive assignments, this paragraph has effect in relation to each of them.

Reduction of rent or term or other variation of lease

15A

(1) Where a lease is varied so as to reduce the amount of the rent, the variation is treated for the purposes of this Part as an acquisition of a chargeable interest by the lessee.

(1A) Where any consideration in money or money's worth (other than an increase in rent) is given by the lessee for any variation of a lease, other than a variation of the amount of the rent or of the term of the lease, the variation is treated for the purposes of this Part as an acquisition of a chargeable interest by the lessee.

(2) Where a lease is varied so as to reduce the term, the variation is treated for the purposes of this Part as an acquisition of a chargeable interest by the lessor.

Meaning of “restricted shares”

Declaration by agent

1A

(1) Where —

(a) the purchaser (or each of them) authorises an agent to complete a land transaction return,

(b) the purchaser (or each of them) makes a declaration that, with the exception of the effective date, the information provided in the return is to the best of his knowledge correct and complete, and

(c) the land transaction return includes a declaration by the agent that the effective date provided in the return is to the best of his knowledge correct,

the requirement in paragraph 1(1)(c) shall be deemed to be met.

(2) Sub-paragraph (1) applies only where the return is in a form specified by the Inland Revenue for the purposes of that sub-paragraph.

(3) Nothing in this paragraph affects the liability of the purchaser (or each of them) under this Part of this Act.

Declaration by the relevant Official Solicitor

1B

(1) Where —

(a) the purchaser (or any of them) is a person under a disability,

(b) the Official Solicitor is acting for the purchaser (or any of them), and

(c) the land transaction return includes a declaration by the Official Solicitor that the return is to the best of his knowledge correct and complete,

the requirement in paragraph 1(1)(c) shall be deemed to be met.

(2) Sub-paragraph (1) applies only where the return is in a form specified by the Inland Revenue for the purposes of that sub-paragraph.

(3) Nothing in this paragraph affects the liability of the purchaser (or each of them) under this Part of this Act.

(4) In this paragraph “the Official Solicitor” means the Official Solicitor to the Supreme Court of England and Wales or the Official Solicitor to the Supreme Court of Northern Ireland (as the case requires).

Disclosure for exemptions: Northern Ireland

Duty at higher rate: exception for tractive units

Requirement of evidence or security

Joint and several liability for unpaid VAT of another trader

Face-value vouchers

Penalty for evasion

Reduction of penalty under section 25 or 26

Demands for penalties

Extensions of time

Chargeable interests

Acquisition by bodies established for national purposes

Compliance with planning obligations

Charities relief

71A

(1) This section applies where arrangements are entered into between a person and a financial institution under which—

(a) the institution purchases a major interest in land or an undivided share of a major interest in land (“the first transaction”),

(b) where the interest purchased is an undivided share, the major interest is held on trust for the institution and the person as beneficial tenants in common,

(c) the institution (or the person holding the land on trust as mentioned in paragraph (b)) grants to the person out of the major interest a lease (if the major interest is freehold) or a sub-lease (if the major interest is leasehold) (“the second transaction”), and

(d) the institution and the person enter into an agreement under which the person has a right to require the institution or its successor in title to transfer to the person (in one transaction or a series of transactions) the whole interest purchased by the institution under the first transaction.

(2) The first transaction is exempt from charge if the vendor is—

(a) the person, or

(b) another financial institution by whom the interest was acquired under arrangements of the kind mentioned in subsection (1) entered into between it and the person.

(3) The second transaction is exempt from charge if the provisions of this Part relating to the first transaction are complied with (including the payment of any tax chargeable).

(4) Any transfer to the person that results from the exercise of the right mentioned in subsection (1)(d) (“a further transaction”) is exempt from charge if—

(a) the provisions of this Part relating to the first and second transactions are complied with, and

(b) at all times between the second transaction and the further transaction—

(i) the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and

(ii) the lease or sub-lease granted under the second transaction is held by the person.

(5) The agreement mentioned in subsection (1)(d) is not to be treated—

(a) as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred (and accordingly section 44(5) does not apply), or

(b) as a distinct land transaction by virtue of section 46 (options and rights of pre-emption).

(6) The requirements of subsection (1), or (4)(b)(ii), are not met if—

(a) the person enters into the arrangement, or holds the lease or sub-lease, as trustee and any beneficiary of the trust is not a person, or

(b) the person enters into the arrangements, or holds the lease or sub-lease, as partner and any of the other partners is not a person.

(7) A further transaction that is exempt from charge by virtue of subsection (4) is not a notifiable transaction unless the transaction involves the transfer to the person of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) References in this section to a person shall be read, in relation to times after the death of the person concerned, as references to his personal representatives.

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

72A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest on unpaid tax

Meaning of “residential property”

Meaning of “effective date” of a transaction

Commencement and transitional provisions

Circumstances in which group relief withdrawn

Circumstances in which relief for company acquisitions withdrawn

Provision of services through intermediary

PAYE: regulations and notional payments

Double taxation relief: profits attributable to overseas permanent establishment

PAYE: regulations and notional payments

Deferred unascertainable consideration: election for treatment of loss

Extension of first-year allowances for ICT expenditure by small enterprises

Expenditure on software for sub-licensing

Double taxation relief: profits attributable to overseas permanent establishment

Overseas life insurance companies

Repos etc

Relevant discounted securities: withdrawal of relief for costs and losses, etc

Rate of landfill tax

Deemed supplies

Amendments about registration, payment etc

Electricity from renewable sources etc

Higher rate of tax: divided companies

Companies in administration

CHP exemption to be based on current efficiency

Authorised unit trusts, OEICs and common investment funds

Rate of landfill tax

Payments in error from or to National Loans Fund

Deemed supplies

Acquisition by house-building company from individual acquiring new dwelling

Transaction land

Meaning of “non-resident transaction”

Whether individual “non-resident” in relation to a chargeable transaction

Partnership interests: application of provisions about exchanges etc.

Election by property-investment partnership to disapply paragraph 10

Application of disadvantaged areas relief

Application of exemptions and reliefs

Application of charities relief

Interpretation: arrangements

Transactions that are not notifiable

Exclusion of market rent leases

Transfer of chargeable interest to a partnership consisting wholly of bodies corporate

Transfer of chargeable interest from a partnership: chargeable consideration including rent

Transfer of partnership interest pursuant to earlier arrangements

Interpretation: arrangements

Interpretation: transfer of chargeable interest to a partnership

Application of group relief

Transactions that are not notifiable

Interpretation: transfer of chargeable interest to a partnership

Interpretation: arrangements

Introduction

PAYE: regulations and notional payments

Exemption where homeworker’s additional expenses met by employer

PAYE: regulations and notional payments

Transfers of value: attribution of gains to beneficiaries

Avoidance affecting proceeds of balancing event

Gains on policies of life insurance etc: rate of tax

Gifts with reservation

Exemption for fuel used in recycling processes

Rate of landfill tax

Deemed supplies

Amendments about registration, payment etc

CHP exemption to be based on current efficiency

Rate of landfill tax

Companies acquiring their own shares

Deemed supplies

Use of electronic means of payment under other provisions

Consequential claims etc

Accounts of Consolidated Fund and National Loans Fund

Debt Management Account: abolition of borrowing cap

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

Acquisition by property trader from personal representatives

Acquisition by house-building company from individual acquiring new dwelling

Application of CFC provisions to Hong Kong and Macao companies

Authorised unit trusts: interest distributions paid gross

Election by property-investment partnership to disapply paragraph 10

Exclusion of market rent leases

Election by property-investment partnership to disapply paragraph 10

Transfer of chargeable interest from a partnership consisting wholly of bodies corporate

Transfer of chargeable interest from a partnership to a partnership

Acquisition of interest in partnership not chargeable except as specially provided

Application of exemptions and reliefs

Transfer of chargeable interest from a partnership: general

Reallocation of trust property as between beneficiaries

Transactions that are not notifiable

Acquisition of interest in partnership not chargeable except as specially provided

Application of charities relief

Reallocation of trust property as between beneficiaries

Meaning of “lease”

Introduction

Withdrawal of group relief in certain cases involving successive transactions

4A

(1) Where, in the case of a transaction (“the relevant transaction”) that is exempt from charge by virtue of paragraph 1 (group relief)—

(a) there is a change in the control of the purchaser,

(b) that change occurs—

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Finance Act 2003

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

Transfer of chargeable interest from a partnership: chargeable consideration including rent

Introduction

Transfer of chargeable interest from a partnership: general

Transfer of partnership interest pursuant to earlier arrangements

Transfer of chargeable interest from a partnership: sum of the lower proportions

Transfer of chargeable interest from a partnership to a partnership

Transfer of chargeable interest from a partnership to a partnership

Assents and appropriations by personal representatives

3A

Cases where conditions for exemption not fully met

8A

Amounts payable in respect of periods before grant of lease

1A

Notification of transactions

13

Interpretation: transfer of chargeable interest to a partnership

1

2

Interpretation: arrangements

3

4

5

6

7

8

9

10

11

Cases where first condition not fully met

3

Charitable trusts

4

Shared ownership lease: treatment of staircasing transaction

4A

SCHEDULE 11A

Introductory

1

Making of claims

2

Duty to keep and preserve records

3

Amendment of claim by claimant

4

Correction of claim by Revenue

5

Giving effect to claims and amendments

6

Notice of enquiry

7

Notice to produce documents etc for purposes of enquiry

8

Appeal against notice to produce documents etc

9

Penalty for failure to produce documents etc

10

Completion of enquiry

11

Direction to complete enquiry

12

Giving effect to amendments under paragraph 11

13

Appeals against amendments under paragraph 11

14

Jurisdiction of Commissioners

15

Transfer of chargeable interest from a partnership to a partnership

Reallocation of trust property as between beneficiaries

Transactions that are not notifiable

Interpretation: transfer of chargeable interest to a partnership

15

16

Interpretation: partnership property and partnership share

17

18

Transfer of partnership interest pursuant to earlier arrangements

19

Interpretation: transfer of chargeable interest to a partnership

20