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Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017

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Contracts and transfers: particular casesE+W

11Contract providing for transfer to third partyE+W

(1)This section applies where a contract is entered into under which a chargeable interest is to be transferred by one party to the contract (““P1””) at the direction or request of the other (““P2””)—

(a)to a person (““P3””) who is not a party to the contract, or

(b)either to such a person or to P2.

(2)P2 is not regarded as entering into a land transaction by reason of entering into the contract.

(3)But if the contract is substantially performed without having been completed—

(a)P2 is treated for the purposes of this Act as acquiring a chargeable interest, and accordingly as entering into a land transaction, and

(b)the effective date of that transaction is when the contract is substantially performed.

(4)Where subsection (3) applies and the contract is (to any extent) afterwards rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of that subsection must (to that extent) be repaid by WRA.

(5)But repayment of tax is due only if a claim for it is made by amendment, in accordance with section 41 of TCMA, of the return made in respect of the contract.

(6)Subject to subsection (7), section 10 (contract and transfer) does not apply in relation to the contract.

(7)Where—

(a)this section applies by virtue of subsection (1)(b), and

(b)by reason of P2's direction or request, P1 becomes obliged to transfer a chargeable interest to P2,

section 10 applies to that obligation as it applies to a contract for a land transaction that is to be completed by a transfer.

(8)Section 10 applies in relation to any contract between P2 and P3, in respect of the chargeable interest referred to in subsection (1), that is to be completed by a transfer.

(9)References to completion in that section, as it so applies, include references to transfer by P1 to P3 of the subject-matter of the contract between P2 and P3.

(10)In this section, “"contract”” includes any agreement and “"transfer”” includes any instrument.

12Contract providing for transfer to third party: effect of transfer of rightsE+W

(1)This section applies where—

(a)a contract (““the original contract””) is entered into under which a chargeable interest is to be transferred by one party to the contract (““P1””) at the direction or request of the other (““P2””)—

(i)to a person (““P3””) who is not a party to the contract, or

(ii)either to such a person or to P2, and

(b)there is an assignment or other transaction (relating to the whole or part of the subject-matter of the original contract) as a result of which a person (““P4””) becomes entitled to exercise any of P2's rights under the original contract in place of P2.

(2)References in the following provisions of this section to a transfer of rights are to any such assignment or other transaction.

(3)P4 is not regarded as entering into a land transaction by reason of the transfer of rights, but section 11 (contract providing for transfer to third party) has effect in accordance with the following provisions.

(4)That section applies as if—

(a)P4 had entered into a contract (a ““secondary contract””) in the same terms as the original contract except with P4 as a party instead of P2, and

(b)the consideration due from P4 under the secondary contract were—

(i)so much of the consideration under the original contract as is referable to the subject-matter of the transfer of rights and is to be given (directly or indirectly) by P4 or a person connected with P4, and

(ii)the consideration given for the transfer of rights.

(5)The substantial performance of the original contract is to be disregarded if it occurs—

(a)at the same time as, and in connection with, the substantial performance of the secondary contract, or

(b)after the transfer of rights.

(6)Where there are successive transfers of rights, subsection (4) has effect in relation to each of them.

(7)The substantial performance of the secondary contract arising from an earlier transfer of rights is to be disregarded if it occurs—

(a)at the same time as, and in connection with, the substantial performance of the secondary contract arising from a subsequent transfer of rights, or

(b)after that subsequent transfer.

(8)Where a transfer of rights relates to only part of the subject-matter of the original contract, or to only some of the rights under that contract—

(a)a reference in subsection (4)(a) or (5) to the original contract, or a reference in subsection (7) to the secondary contract arising from an earlier transfer, is to that contract so far as relating to that part or those rights, and

(b)that contract so far as not relating to that part or those rights is to be treated as a separate contract.

(9)The effective date of a land transaction treated as entered into by virtue of subsection (4) is not earlier than the date of the transfer of rights.

(10)In relation to a such a transaction—

(a)references in Schedule 16 (group relief) to the seller are to be read as references to P1;

(b)other references in this Act to the seller are to be read, where the context permits, as referring to either P1 or P2.

(11)In this section, “"contract”” includes any agreement.

13Pre-completion transactionsE+W

Schedule 2 makes—

(a)provision about the application of section 10 (contract and transfer) in certain cases where an assignment of rights, subsale or other transaction is entered into without the contract having been completed, and

(b)other provision about such cases.

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