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

Contract providing for transfer to third party

Section 11 deals with the land transaction tax treatment where a contract allows one party to direct or request that a chargeable interest be transferred to a third party rather than to themselves.

• Where a contract allows P2 to direct P1 to transfer a chargeable interest to a third party (P3), simply entering into that contract does not count as a land transaction by P2.
• However, if P2 substantially performs the contract before formal completion, P2 is treated as having acquired a chargeable interest and must account for LTT from the date of substantial performance.
• If the contract is later rescinded, annulled, or otherwise falls through, any tax paid on substantial performance can be reclaimed from the WRA by amending the original tax return.
• The normal rules linking contract and completion (section 10) are disapplied for the original contract, but do apply to any onward contract between P2 and P3 and where P2 directs P1 to transfer the interest to P2 instead.

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