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Finance Bill
Schedule 2 — Supply of electronic services in member States: VAT special accounting scheme

    158

 

turnover taxes - arrangements for the refund of value added tax to

taxable persons not established in Community territory (86/560/

EEC).

Part 5

Supplementary

5

Interpretation

          23               (1)               In this Schedule—

                       “the 1977 VAT Directive” means the Sixth Council Directive

of 17 May 1977 on the harmonisation of the laws of the

member States relating to turnover taxes - common

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system of value added tax: uniform basis of assessment

(77/388/EEC);

                       “the 2002 VAT Directive” means the Council Directive of 7

May 2002 amending and amending temporarily the 1977

VAT Directive as regards the value added tax

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arrangements applicable to radio and television

broadcasting services and certain electronically supplied

services (2002/38/EC);

                       “Article 26c” has the meaning given by paragraph 2(7)

above;

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                       “the Controller” has the meaning given by paragraph 11(7)

above;

                       “participant in the special scheme” has the meaning given

by paragraph 16(5) above;

                       “qualifying supply” has the meaning given by paragraph 3

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above;

                       “registration number” means the number allocated to a

person on his registration under this Schedule in

accordance with paragraph 6(a) above;

                       “registration request” is to be construed in accordance with

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paragraph 4(1)(b) above;

                       “reporting period” is to be construed in accordance with

paragraph 11(2) above;

                       “special accounting return” is to be construed in accordance

with paragraph 11(1) above.

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                           (2)               References in this Schedule to a qualifying supply being “treated

as made” in a member State are references to its being treated as

made—

                      (a)                     in the United Kingdom, by virtue of any provision which

gives effect in the United Kingdom to Article 9(2)(f) of the

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1977 VAT Directive (which is inserted by Article 1(1)(b) of

the 2002 VAT Directive), or

                      (b)                     in another member State, by virtue of any provision of the

law of that member State which gives effect to that Article.

                           (3)               The provision which, as at 9th April 2003, is to give effect in the

45

United Kingdom to Article 9(2)(f) of the 1977 VAT Directive (as

mentioned in sub-paragraph (2)(a) above) is article 16A of the

 

 

Finance Bill
Schedule 3 — Stamp duty land tax: transactions exempt from charge

    159

 

Value Added Tax (Place of Supply of Services) Order 1992 (which

is prospectively inserted by article 3 of the Value Added Tax (Place

of Supply of Services) (Amendment) Order 2003).”.

Schedule 3

Section 49

 

Stamp duty land tax: transactions exempt from charge

5

No chargeable consideration

  1        A land transaction is exempt from charge if there is no chargeable

consideration for the transaction.

Grant of certain leases by registered social landlords

  2       (1)      The grant of a lease of a dwelling is exempt from charge if the lease—

10

              (a)             is granted by a registered social landlord to one or more individuals

in accordance with arrangements to which this paragraph applies,

and

              (b)             is for an indefinite term or is terminable by notice of a month or less.

          (2)      This paragraph applies to arrangements between a registered social

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landlord and a housing authority under which the landlord provides, for

individuals nominated by the authority in pursuance of its statutory

housing functions, temporary rented accommodation which the landlord

itself has obtained on a short-term basis.

                   The reference above to accommodation obtained by the landlord “on a short-

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term basis” is to accommodation leased to the landlord for a term of five

years or less.

          (3)      A “housing authority” means—

              (a)             in relation to England and Wales—

                    (i)                   a principal council within the meaning of the Local

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Government Act 1972 (c. 70), or

                    (ii)                  the Common Council of the City of London;

              (b)             in relation to Scotland, a council constituted under section 2 of the

Local Government etc. (Scotland) Act 1994 (c. 39);

              (c)             in relation to Northern Ireland—

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                    (i)                   the Department for Social Development in Northern Ireland,

or

                    (ii)                  the Northern Ireland Housing Executive.

Transactions in connection with divorce etc

  3        A transaction between one party to a marriage and the other is exempt from

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charge if it is effected—

              (a)             in pursuance of an order of a court made on granting in respect of the

parties a decree of divorce, nullity of marriage or judicial separation;

              (b)             in pursuance of an order of a court made in connection with the

dissolution or annulment of the marriage, or the parties’ judicial

40

separation, at any time after the granting of such a decree;

 

 

Finance Bill
Schedule 4 — Stamp duty land tax: chargeable consideration

    160

 

              (c)             in pursuance of—

                    (i)                   an order of a court made at any time under section 22A, 23A

or 24A of the Matrimonial Causes Act 1973 (c. 18), or

                    (ii)                  an incidental order of a court made under section 8(2) of the

Family Law (Scotland) Act 1985 (c. 37) by virtue of section

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14(1) of that Act;

              (d)             at any time in pursuance of an agreement of the parties made in

contemplation or otherwise in connection with the dissolution or

annulment of the marriage, their judicial separation or the making of

a separation order in respect of them.

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Variation of testamentary dispositions etc

  4       (1)      A transaction following a person’s death that varies a disposition (whether

effected by will, under the law relating to intestacy or otherwise) of property

of which the deceased was competent to dispose is exempt from charge if the

following conditions are met.

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          (2)      The conditions are—

              (a)             that the transaction is carried out within the period of two years after

a person’s death, and

              (b)             that no consideration in money or money’s worth other than the

making of a variation of another such disposition is given for it.

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          (3)      This paragraph applies whether or not the administration of the estate is

complete or the property has been distributed in accordance with the

original dispositions.

Power to add further exemptions

  5       (1)      The Treasury may by regulations provide that any description of land

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transaction specified in the regulations is exempt from charge.

          (2)      The regulations may contain such supplementary, incidental and

transitional provision as appears to the Treasury to be appropriate.

Schedule 4

Section 50

 

Stamp duty land tax: chargeable consideration

30

Money or money’s worth

  1       (1)      The chargeable consideration for a transaction is, except as otherwise

expressly provided, any consideration in money or money’s worth given for

the subject-matter of the transaction, directly or indirectly, by the purchaser

or a person connected with him.

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          (2)      Section 839 of the Taxes Act 1988 (connected persons) applies for the

purposes of sub-paragraph (1).

Value added tax

  2        The chargeable consideration for a transaction shall be taken to include any

value added tax chargeable in respect of the transaction, other than value

40

 

 

Finance Bill
Schedule 4 — Stamp duty land tax: chargeable consideration

    161

 

added tax chargeable by virtue of an election under paragraph 2 of Schedule

10 to the Value Added Tax Act 1994 (c. 23) made after the effective date of

the transaction.

Postponed consideration

  3        The amount or value of the chargeable consideration for a transaction shall

5

be determined without any discount for postponement of the right to receive

it or any part of it.

Just and reasonable apportionment

  4       (1)      For the purposes of this Part consideration attributable—

              (a)             to two or more land transactions, or

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              (b)             in part to a land transaction and in part to another matter, or

              (c)             in part to matters making it chargeable consideration and in part to

other matters,

                   shall be apportioned on a just and reasonable basis.

          (2)      If the consideration is not so apportioned, this Part has effect as if it had been

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so apportioned.

          (3)      For the purposes of this paragraph any consideration given for what is in

substance one bargain shall be treated as attributable to all the elements of

the bargain, even though—

              (a)             separate consideration is, or purports to be, given for different

20

elements of the bargain, or

              (b)             there are, or purport to be, separate transactions in respect of

different elements of the bargain.

Exchanges

  5       (1)      This paragraph applies to determine the chargeable consideration where

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one or more land transactions are entered into by a person as purchaser

(alone or jointly) wholly or partly in consideration of one or more other land

transactions being entered into by him (alone or jointly) as vendor.

          (2)      In this paragraph—

              (a)             “relevant transaction” means any of those transactions, and

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              (b)             “relevant acquisition” means a relevant transaction entered into as

purchaser and “relevant disposal” means a relevant transaction

entered into as vendor.

          (3)      The following rules apply if the subject-matter of any of the relevant

transactions is a major interest in land—

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              (a)             where a single relevant acquisition is made, the chargeable

consideration for the acquisition is—

                    (i)                   the market value of the subject-matter of the acquisition, and

                    (ii)                  if the acquisition is the grant of a lease at a rent, that rent;

              (b)             where two or more relevant acquisitions are made, the chargeable

40

consideration for each relevant acquisition is—

                    (i)                   the market value of the subject-matter of that acquisition, and

                    (ii)                  if the acquisition is the grant of a lease at a rent, that rent.

 

 

Finance Bill
Schedule 4 — Stamp duty land tax: chargeable consideration

    162

 

          (4)      The following rules apply if the subject-matter of none of the relevant

transactions is a major interest in land—

              (a)             where a single relevant acquisition is made in consideration of one or

more relevant disposals, the chargeable consideration for the

acquisition is the amount or value of any chargeable consideration

5

other than the disposal or disposals that is given for the acquisition;

              (b)             where two or more relevant acquisitions are made in consideration

of one or more relevant disposals, the chargeable consideration for

each relevant acquisition is the appropriate proportion of the

amount or value of any chargeable consideration other than the

10

disposal or disposals that is given for the acquisitions.

          (5)      For the purposes of sub-paragraph (4)(b) the appropriate proportion is—equation: over[times[char[M],char[V]],times[char[T],char[M],char[V]]]

           where—

                    MV is the market value of the subject-matter of the acquisition for

which the chargeable consideration is being determined, and

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                    TMV is the total market value of the subject-matter of all the relevant

acquisitions.

          (6)      This paragraph has effect subject to—

               paragraph 6 of this Schedule (partition etc: disregard of existing

interest), and

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               section 58 (relief for certain exchanges of residential property).

Partition etc: disregard of existing interest

  6        In the case of a land transaction giving effect to a partition or division of a

chargeable interest to which persons are jointly entitled, the share of the

interest held by the purchaser immediately before the partition or division

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does not count as chargeable consideration.

Valuation of non-monetary consideration

  7        Except as otherwise expressly provided, the value of any chargeable

consideration for a land transaction, other than—

              (a)             money (whether in sterling or another currency), or

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              (b)             debt as defined for the purposes of paragraph 8 (debt as

consideration),

           shall be taken to be its market value at the effective date of the transaction.

Debt as consideration

  8       (1)      Where the chargeable consideration for a land transaction consists in whole

35

or in part of—

              (a)             the satisfaction or release of debt due to the purchaser or owed by the

vendor, or

              (b)             the assumption of existing debt by the purchaser,

                   the amount of debt satisfied, released or assumed shall be taken to be the

40

whole or, as the case may be, part of the chargeable consideration for the

transaction.

 

 

Finance Bill
Schedule 4 — Stamp duty land tax: chargeable consideration

    163

 

          (2)      If the effect of sub-paragraph (1) would be that the amount of the chargeable

consideration for the transaction exceeded the market value of the subject-

matter of the transaction, the amount of the chargeable consideration is

treated as limited to that value.

          (3)      In this paragraph—

5

              (a)             “debt” means an obligation, whether certain or contingent, to pay a

sum of money either immediately or at a future date,

              (b)             “existing debt”, in relation to a transaction, means debt created or

arising before the effective date of, and otherwise than in connection

with, the transaction, and

10

              (c)             references to the amount of a debt are to the principal amount

payable or, as the case may be, the total of the principal amounts

payable, together with the amount of any interest that has accrued

due on or before the effective date of the transaction.

Conversion of amounts in foreign currency

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  9       (1)      References in this Part to the amount or value of the consideration for a

transaction are to its amount or value in sterling.

          (2)      For the purposes of this Part the sterling equivalent of an amount expressed

in another currency shall be ascertained by reference to the London closing

exchange rate on the effective date of the transaction (unless the parties have

20

used a different rate for the purposes of the transaction).

Carrying out of works

  10      (1)      Where the whole or part of the consideration for a land transaction consists

of the carrying out of works of construction, improvement or repair of a

building or other works to enhance the value of land, then—

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              (a)             to the extent that the conditions specified in sub-paragraph (2) are

met, the value of the works does not count as chargeable

consideration, and

              (b)             to the extent that those conditions are not met, the value of the works

shall be taken into account as chargeable consideration.

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          (2)      The conditions referred to in sub-paragraph (1) are—

              (a)             that the works are carried out after the effective date of the

transaction,

              (b)             that the works are carried out on land acquired or to be acquired

under the transaction or on other land held by the purchaser or a

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person connected with him, and

              (c)             that it is not a condition of the transaction that the works are carried

out by the vendor or a person connected with him.

          (3)      In this paragraph—

              (a)             references to the acquisition of land are to the acquisition of a major

40

interest in it;

              (b)             the value of the works shall be taken to be the amount that would

have to be paid in the open market for the carrying out of the works

in question.

          (4)      Section 839 of the Taxes Act 1988 (connected persons) has effect for the

45

purposes of this paragraph.

 

 

Finance Bill
Schedule 4 — Stamp duty land tax: chargeable consideration

    164

 

Provision of services

  11       Where the whole or part of the consideration for a land transaction consists

of the provision of services (other than the carrying out of works to which

paragraph 10 applies), the value of that consideration shall be taken to be the

amount that would have to be paid in the open market to obtain those

5

services.

Land transaction entered into by reason of employment

  12      (1)      Where a land transaction is entered into by reason of the purchaser’s

employment, or that of a person connected with him, then—

              (a)             if the transaction gives rise to a charge to tax under Chapter 5 of Part

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3 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (taxable

benefits: living accommodation) and—

                    (i)                   no rent is payable by the purchaser, or

                    (ii)                  the rent payable by the purchaser is less than the cash

equivalent of the benefit calculated under section 105 or 106

15

of that Act,

                              there shall be taken to be payable by the purchaser as rent an amount

equal to the cash equivalent chargeable under those sections;

              (b)             if the transaction would give rise to a charge under that Chapter but

for section 99 of that Act (accommodation provided for performance

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of duties), the consideration for the transaction is the actual

consideration (if any);

              (c)             if neither paragraph (a) nor paragraph (b) applies, the consideration

for the transaction shall be taken to be not less than the market value

of the subject-matter of the transaction as at the effective date of the

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transaction.

          (2)      Section 839 of the Taxes Act 1988 (connected persons) has effect for the

purposes of this paragraph.

Obligations under lease

  13      (1)      In the case of the grant of a lease none of the following counts as chargeable

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consideration—

              (a)             any undertaking by the tenant to repair, maintain or insure the

demised premises (in Scotland, the leased premises);

              (b)             any undertaking by the tenant to pay any amount in respect of

services, repairs, maintenance or insurance or the landlord’s costs of

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management;

              (c)             any other obligation undertaken by the tenant that is not such as to

affect the rent that a tenant would be prepared to pay in the open

market;

              (d)             any guarantee of the payment of rent or the performance of any other

40

obligation of the tenant under the lease;

              (e)             any penal rent, or increased rent in the nature of a penal rent, payable

in respect of the breach of any obligation of the tenant under the

lease.

 

 

 
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