Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section 12

Contract providing for transfer to third party: effect of transfer of rights

Section 12 explains the land transaction tax consequences when a person's rights under a contract to direct a property transfer to a third party are assigned or transferred to someone else.

• When someone (P2) has contracted for a property to be transferred to a nominated third party (or to themselves), and P2's rights under that contract are assigned to another person (P4), special rules apply to determine how LTT is charged.
• P4 is treated as if they had entered into a new "secondary contract" on the same terms as the original, and the consideration for that secondary contract includes both the relevant portion of the original purchase price that P4 will pay and whatever P4 paid to acquire the rights from P2.
• If the original contract is substantially performed at the same time as (and in connection with) the secondary contract, or after the transfer of rights, the original contract is disregarded for LTT purposes — preventing a double charge to tax.
• Where rights are transferred in stages or relate to only part of the subject matter, each successive transfer is treated separately, and partial transfers result in the original contract being split into separate contracts for LTT purposes.