PART III SETTLED PROPERTY
CHAPTER III SETTLEMENTS WITHOUT INTERESTS IN POSSESSION , AND CERTAIN SETTLEMENTS IN WHICH INTERESTS IN POSSESSION SUBSIST
Works of art, historic buildings, etc.
77 Maintenance funds for historic buildings, etc.
Schedule 4 to this Act shall have effect.
78 Conditionally exempt occasions.
(1)
A transfer of property or other event shall not constitute an occasion on which tax is chargeable under any provision of this Chapter other than section 64 if the property in respect of which the charge would have been made has been comprised in the settlement throughout the six years ending with the transfer or event, and—
(a)
the property is, on a claim made for the purpose, designated by the Treasury under section 31 above, and
(b)
the requisite undertaking described in that section is given with respect to the property by such person as the Treasury think appropriate in the circumstances of the case F1or (where the property is an area of land within subsection (1)(d) of that section) the requisite undertakings described in that section are given with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case.
F2(1A)
A claim under subsection (1) above must be made no more than two years after the date of the transfer or other event in question or within such longer period as the Board may allow.
(2)
References in this Chapter to a conditionally exempt occasion are to—
(a)
a transfer or event which by virtue of subsection (1) above does not constitute an occasion on which tax is chargeable under this Chapter;
(b)
a transfer or event which, by virtue of section 81(1) of the M1Finance Act 1976, did not constitute an occasion on which tax was chargeable under Chapter II of Part IV of the M2Finance Act 1982;
(c)
a conditionally exempt distribution within the meaning given by section 81(2) of the Finance Act 1976 as it had effect in relation to events before 9th March 1982.
(3)
Where there has been a conditionally exempt occasion in respect of any property, sections 32, F332A, 33(1), F433(2ZA) to (7) and 35(2) above shall have effect (and tax shall accordingly be chargeable under section 32 F3or 32A) as if—
(a)
references to a conditionally exempt transfer and to such a transfer of property included references respectively to a conditionally exempt occasion and to such an occasion in respect of property;
(b)
references to a disposal otherwise than by sale included references to any occasion on which tax is chargeable under any provision of this Chapter other than section 64;
(c)
references to an undertaking given under section 30 above included references to an undertaking given under this section;
and the references in section 33(5) above to the person who made a conditionally exempt transfer shall have effect in relation to a conditionally exempt occasion as references to the person who is the settlor of the settlement in respect of which the occasion occurred (or if there is more than one such person, whichever of them the Board may select).
(4)
Where by virtue of subsection (3) above the relevant person for the purposes of section 33 above is the settlor of a settlement, the rate (or each of the rates) mentioned in section 33(1)(b)(i) or (ii)—
(a)
shall, if the occasion occurred before the first ten-year anniversary to fall after the property became comprised in the settlement concerned, be 30 per cent. of what it would be apart from this subsection, and
(b)
shall, if the occasion occurred after the first and before the second ten-year anniversary to fall after the property became so comprised, be 60 per cent. of what it would be apart from this subsection;
F5and the appropriate provision of section 7 for the purposes of section 33(1)(b)(ii) is, if the settlement was created on his death, subsection (1) and, if not, subsection (2).
(5)
“(ii)
the rate or rates that would have applied to that amount (“the chargeable amount”) F6in accordance with the appropriate provision of section 7 above if the relevant person had died when the chargeable event occurred, the value transferred on his death had been equal to the amount on which estate duty was chargeable when he in fact died, and the chargeable amount had been added to that value and had formed the highest part of it.”
(6)
Section 34 above shall not apply to a chargeable event in respect of property if the last conditionally exempt transfer of the property has been followed by a conditionally exempt occasion in respect of it.
79 Exemption from ten-yearly charge.
(1)
Where property is comprised in a settlement and there has been a conditionally exempt transfer of the property on or before the occasion on which it became comprised in the settlement, section 64 above shall not have effect in relation to the property on any ten-year anniversary falling before the first occurrence after the transfer of a chargeable event with respect to the property.
(2)
Where property is comprised in a settlement and there has been, on or before the occasion on which it became comprised in the settlement, a disposal of the property in relation to which subsection (4) of section F7258 of the 1992 Act (capital gains tax relief for works of art etc.) had effect, section 64 above shall not have effect in relation to the property on any ten-year anniversary falling before the first occurrence after the disposal of an event on the happening of which the property is treated as sold under subsection (5) of the said section F7258.
(3)
Where property is comprised in a settlement and there has been no such transfer or disposal of the property as is mentioned in subsection (1) or (2) above on or before the occasion on which it became comprised in the settlement, F8subsection (3A) below applies if —
(a)
the property F9has, on a claim made for the purpose, been designated by the Treasury under section 31 above,
F10(aa)
that claim is made during the period beginning with the date of a ten-year anniversary of the settlement (“the relevant ten-year anniversary”) and ending—
(i)
two years after that date, or
(ii)
on such later date as the Board may allow,
(b)
the requisite undertaking described in F11section 31 is given F12with respect to the property by such person as the Treasury think appropriate in the circumstances of the case, F12or (where the property is an area of land within subsection (1)(d) of that section) the requisite undertakings described in that section F13 are given with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case, and
(c)
the property is relevant property,
F14...
F15(3A)
Tax is not chargeable under section 64 above in relation to the property by reference to the relevant ten-year anniversary concerned or any subsequent ten-year anniversaries; but on the first occurrence of an event which, if there had been a conditionally exempt transfer of the property immediately before that relevant ten-year anniversary, would be a chargeable event with respect to the property—
(a)
there is a charge to tax under this subsection, and
(b)
on any ten-year anniversary falling after that event, tax is chargeable under section 64 above in relation to the property.
(4)
Tax shall not be charged under F16subsection (3A) above in respect of property if, after the occasion mentioned in subsection (3) above and before the occurrence mentioned in subsection (3A) , there has been a conditionally exempt occasion in respect of the property.
(5)
The amount on which tax is charged under F17subsection (3A) above shall be an amount equal to the value of the property at the time of the event.
F18(5A)
Where the event giving rise to a charge to tax under F19subsection (3A) above is a disposal on sale, and the sale—
(a)
was not intended to confer any gratuitous benefit on any person, and
(b)
was either a transaction at arm's length between persons not connected with each other or a transaction such as might be expected to be made at arm's length between persons not connected with each other,
the value of the property at the time of that event shall be taken for the purposes of subsection (5) above to be equal to the proceeds of the sale.
(6)
The rate at which tax is charged under F20subsection (3A) above shall be the aggregate of the following percentages—
(a)
0·25 per cent. for each of the first forty complete successive quarters in the relevant period,
(b)
0·20 per cent. for each of the next forty,
(c)
0·15 per cent. for each of the next forty,
(d)
0·10 per cent. for each of the next forty, and
(e)
0·5 per cent. for each of the next forty.
F21(7)
In subsection (6) above “the relevant period” means the period given by subsection (7A) below or, if shorter, the period given by subsection (7B) below.
(7A)
The period given by this subsection is the period beginning with the latest of—
(a)
the day on which the settlement commenced,
(b)
the date of the last ten-year anniversary of the settlement to fall before the day on which the property became comprised in the settlement,
(c)
the date of the last ten-year anniversary of the settlement to fall before the F22relevant ten-year anniversary , and
(d)
13th March 1975,
and ending with the day before the event giving rise to the charge.
(7B)
The period given by this subsection is the period equal in length to the number of relevant-property days in the period—
(a)
beginning with the day that is the latest of those referred to in paragraphs (a) to (d) of subsection (7A) above, and
(b)
ending with the day before the event giving rise to the charge.
(7C)
For the purposes of subsection (7B) above, a day is a “relevant-property day” if at any time on that day the property was relevant property.
(8)
Subsection (9) below shall have effect where—
(a)
(b)
on that anniversary a charge to tax falls to be made in respect of the settlement under section 64, and
(c)
the property became comprised in the settlementF25... within the period of ten years ending with that anniversary.
F26(9A)
Subsection (9B) below applies where the same event gives rise—
(a)
to a charge under F27subsection (3A) above in relation to any property, and
(b)
to a charge under section 32 or 32A above in relation to that property.
(9B)
If the amount of each of the charges is the same, each charge shall have effect as a charge for one half of the amount that would be charged apart from this subsection; otherwise, whichever of the charges is lower in amount shall have effect as if it were a charge the amount of which is nil.
(9)
In calculating the rate at which tax is charged under section 64 above, the value of the consideration given for the property on its becoming comprised in the settlement shall be treated for the purposes of section 66(5)(b) above as if it were an amount on which a charge to tax was imposed in respect of the settlement under section 65 above at the time of the property becoming so comprised.
(10)
In subsection (1) above, the reference to a conditionally exempt transfer of any property includes a reference to a transfer of value in relation to which the value of any property has been left out of account under the provisions of sections 31 to 34 of the M3Finance Act 1975 and, in relation to such property, the reference to a chargeable event includes a reference to an event on the occurrence of which tax becomes chargeable under Schedule 5 to this Act.
F2879A Variation of undertakings.
(1)
An undertaking given under section 78 or 79 above may be varied from time to time by agreement between the Board and the person bound by the undertaking.
(2)
Where F29the tribunal is satisfied that—
(a)
the Board have made a proposal for the variation of such an undertaking to the person bound by the undertaking,
(b)
that person has failed to agree to the proposed variation within six months after the date on which the proposal was made, and
(c)
it is just and reasonable, in all the circumstances, to require the proposed variation to be made,
F30the tribunal may direct that the undertaking is to have effect from a specified date as if the proposed variation had been agreed to by the person bound by the undertaking.
(3)
(4)
A direction under this section shall not take effect if, before the date specified by the F33tribunal, a variation different from that to which the direction relates is agreed between the Board and the person bound by the undertaking.