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.
Commencement Information
I1S. 12 in force at 1.4.2018 by S.I. 2018/34, art. 3