SCHEDULE 2PRE-COMPLETION TRANSACTIONS
PART 1INTRODUCTION AND KEY CONCEPTS
1Overview
1
This Schedule makes provision about the application of this Act (in particular section 10 (contract and transfer)) to pre-completion transactions (the meaning of which is set out in paragraph 3).
2
The Schedule is arranged as follows—
a
this Part makes introductory provisions setting out the circumstances where this Schedule applies (paragraph 2) and explaining the meaning of “pre-completion transaction” and other key terms referred to in the Schedule;
b
Part 2 sets out how this Act applies in cases where the pre-completion transaction is an assignment of rights (the meaning of which is set out in paragraph 6);
c
Part 3 sets out how this Act applies in cases involving free-standing transfers (the meaning of which is set out in paragraph 12);
d
Part 4 provides for a special rule (“the minimum consideration rule”) which applies to determine the consideration given in cases where the parties in relation to a pre-completion transaction are connected or are otherwise not acting at arm’s length;
e
Part 5 provides for relief to be available to certain buyers in cases where certain pre-completion transactions are entered into;
f
Part 6 makes some general interpretative provisions.
2Application of this Schedule
1
This Schedule applies where—
a
a person (“the original buyer”) enters into a contract (“the original contract”) for the acquisition by the original buyer of a chargeable interest under which the acquisition is to be completed by a transfer, and
b
there is a pre-completion transaction.
2
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.
3
For any one contract for the acquisition of a chargeable interest there is only one original buyer (and for the purposes of this Schedule joint original buyers are to be treated as one original buyer).
4
This Schedule does not apply where paragraph 21 of Schedule 6 (assignment of agreement for lease) applies (and accordingly, despite paragraph 3, the assignment of an agreement for lease is not a pre-completion transaction).
3Meaning of “pre-completion transaction”
1
A transaction is a pre-completion transaction if—
a
as a result of the transaction a person other than the original buyer (“the transferee”) becomes entitled to call for a transfer to the transferee of the whole or part of the subject-matter of the original contract, and
b
immediately before the transaction took place a person (other than the transferee but not necessarily the original buyer) was entitled under the original contract to call for a transfer of the whole or that part of that subject-matter.
2
A transaction that gives effect to a person’s acquisition of the whole or part of the subject-matter of the original contract is not a pre-completion transaction.
3
The grant or assignment of an option is not a pre-completion transaction.
4
The fact that a transaction has the effect of discharging the original contract does not prevent that transaction from being a pre-completion transaction.
4Other key terms
1
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 paragraph 2(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.
2
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 transfer of (what became) the subject-matter of the pre-completion transaction.
3
References in this Schedule to the “subject-matter” of a pre-completion transaction—
a
are to the chargeable interest the transfer of which the transferee is entitled to call for as a result of the pre-completion transaction, and
b
also include, so far as is appropriate, interests or rights appurtenant or pertaining to the chargeable interest.
5Tax not charged on transferee by reason of the pre-completion transaction
The transferee is not regarded as entering into a land transaction only by reason of the pre-completion transaction.