Finance Act 2009

General conditions for operation of reliefs etc

5 (1) This paragraph defines conditions A to G for the purposes of paragraphs 6 to 18.

Paragraphs 20 and 22 set out circumstances in which the reliefs provided by paragraphs 6 to 18 are not available even if conditions A to G are met.

(2) Condition A is that one person (“P”) and another (“Q”) enter into arrangements under which—

(a) P transfers to Q a qualifying interest in land (“the first transaction”), and

(b) P and Q agree that, when the interest ceases to be held by Q as mentioned in sub-paragraph (3)(b), Q will transfer the interest to P.

(3) Condition B is that—

(a) Q, as bond-issuer, enters into an alternative finance investment bond (whether before or after entering into the arrangements mentioned in sub-paragraph (2)), and

(b) the interest in land to which those arrangements relate is held by Q as a bond asset.

(4) Condition C is that, for the purpose of generating income or gains for the alternative finance investment bond—

(a) Q and P enter into a leaseback agreement, or

(b) such other condition or conditions as may be specified in regulations made by the Treasury is or are met.

(5) For the purposes of condition C, Q and P enter into a leaseback agreement if Q grants to P, out of the interest transferred to Q—

(a) a lease (if the interest transferred is freehold or, in Scotland, the interest of the owner), or

(b) a sub-lease (if the interest transferred is leasehold or, in Scotland, the tenant’s right over or interest in a property subject to a lease).

(6) Condition D is that, before the end of the period of 120 days beginning with the effective date of the first transaction, Q provides HMRC with the prescribed evidence that—

(a) in England and Wales, a satisfactory legal charge has been entered in the register of title kept under section 1 of the Land Registration Act 2002,

(b) in Scotland, a satisfactory standard security has been registered in the Land Register of Scotland, or

(c) in Northern Ireland, a satisfactory charge has been entered in the register of titles kept under section 10 of the Land Registration Act (Northern Ireland) 1970.

(7) A charge or security is satisfactory for the purposes of condition D if it—

(a) is a first charge on, or a security ranking first granted over, the interest transferred to Q,

(b) is in favour of the Commissioners for Her Majesty’s Revenue and Customs, and

(c) is for the amount mentioned in sub-paragraph (8).

(8) That amount is the total of—

(a) the amount of stamp duty land tax which would (apart from paragraph 6(2)) be chargeable on the first transaction if the chargeable consideration for that transaction had been the market value of the interest at that time, and

(b) any interest and any penalties which would for the time being be payable on or in respect of that amount of tax, if the tax had been due and payable (but not paid) in respect of the first transaction.

(9) Condition E is that the total of the payments of capital made to Q before the termination of the bond is not less than 60% of the value of the interest in the land at the time of the first transaction.

(10) Condition F is that Q holds the interest in the land as a bond asset until the termination of the bond.

(11) Condition G is that—

(a) before the end of the period of 30 days beginning with the date on which the interest in the land ceases to be held as a bond asset, that interest is transferred by Q to P (“the second transaction”), and

(b) the second transaction is effected not more than 10 years after the first transaction.

(12) The Treasury may by regulations amend sub-paragraph (11)(b) by substituting for the period mentioned there such other period as may be specified.