Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section 10

Contract and transfer

Section 10 explains how land transaction tax applies when there is a contract for a land transaction that is to be completed by a transfer, and in particular what happens when the contract is substantially performed before formal completion takes place.

• Simply entering into a contract for a land transaction does not itself trigger a land transaction tax charge — the charge normally arises on completion of the transfer.
• If the contract is substantially performed before formal completion (for example, by the buyer taking possession or paying substantially all of the consideration), the contract is treated as the land transaction at that point, and tax becomes due.
• Where tax has already been charged on substantial performance and the transfer later completes, both events are notifiable, but additional tax on completion is only due to the extent that the tax on the completed transaction exceeds the tax already paid on substantial performance.
• If a contract that was substantially performed is later rescinded, annulled, or otherwise not carried into effect, the tax paid on substantial performance must be repaid by the Welsh Revenue Authority, provided a claim is made by amending the relevant tax return.