Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 11 paragraph 17

Control of underlying asset prevents relief

Schedule 11 paragraph 17 prevents alternative finance investment bond (AFIB) relief from applying where a bond-holder, or a group of connected bond-holders, acquires control of the underlying asset.

• Relief under paragraphs 13 or 15 (for the first and second transactions) is unavailable if a bond-holder, or a group of connected bond-holders, acquires control of the underlying asset — meaning they obtain sufficient rights to manage and control the bond assets to the exclusion of other bond-holders.
• The timing of when control is acquired determines the consequence: if control is acquired within 30 days of the effective date of the first transaction, relief simply does not apply; if control is acquired after that 30-day period (and the relief conditions were previously met), any relief already given is treated as withdrawn.
• There is an exception where the bond-holder (or all connected bond-holders) did not know and had no reason to suspect that acquiring the rights gave them management and control, provided they transfer sufficient rights as soon as reasonably practicable after becoming aware.
• A further exception applies where the bond-holder is underwriting a public offer of rights under the bond — meaning they have agreed to provide capital if other investors do not — and does not actually exercise management and control of the bond assets.