Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 2 paragraph 15

Minimum consideration rule for pre-completion transactions between connected parties

Schedule 2 paragraph 15 introduces a minimum consideration rule that applies when a pre-completion transaction (either an assignment of rights or a free-standing transfer) results in the transferee acquiring or being treated as acquiring a chargeable interest, and the parties are connected or not dealing at arm's length.

• Where there is a relevant connection between parties to a pre-completion transaction, the consideration for the land transaction cannot be understated — it is treated as the highest of three amounts: the actual consideration, the first minimum amount, or the second minimum amount.
• A "relevant connection" exists when the transferee in the implemented pre-completion transaction is connected with, or not dealing at arm's length with, either the transferor in that same transaction or any earlier transferor in a chain of successive pre-completion transactions relating to the same original contract.
• The rule catches chains of pre-completion transactions — it looks back through all earlier links in the chain that share at least part of the same subject matter, to identify whether any relevant connection exists between the final transferee and any prior transferor.
• Where the chain of transactions includes free-standing transfers that relate back to an underlying contract that is not itself a free-standing transfer, the "original contract" is that underlying contract, and the "original buyer" is the buyer under that contract.

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