Section 45A — Finance Act 2003: Contract providing for conveyance to third party: effect of transfer of rights

Contract providing for conveyance to third party: effect of transfer of rights 45A 1 This section applies where—

a a contract (“the original contract”) is entered into under which a chargeable interest is to be conveyed by one party to the contract (A) at the direction or request of the other (B)—

i to a person (C) who is not a party to the contract, or ii either to such a person or to B, and b there is an assignment or other transaction (relating to the whole or part of the subject-matter of the original contract) as a result of which a person (D) becomes entitled to exercise any of B’s rights under the original contract in place of B. References in the following provisions of this section to a transfer of rights are to any such assignment or other transaction.

2 D is not regarded as entering into a land transaction by reason of the transfer of rights, but section 44A (contract providing for conveyance to third party) has effect in accordance with the following provisions of this section.

3 That section applies as if—

a D had entered into a contract (a “secondary contract”) in the same terms as the original contract except with D as a party instead of B, and b the consideration due from D under the secondary contract were—

i so much of the consideration under the original contract as is referable to the subject-matter of the transfer of rights and is to be given (directly or indirectly) by D or a person connected with him, and ii the consideration given for the transfer of rights.

4 The substantial performance of the original contract shall be disregarded if—

a it occurs at the same time as, and in connection with, the substantial performance of the secondary contract, or b it occurs after the transfer of rights.

5 Where there are successive transfers of rights, subsection (3) has effect in relation to each of them.

6 The substantial performance of the secondary contract arising from an earlier transfer of rights shall be disregarded if—

a it occurs at the same time as, and in connection with, the substantial performance of the secondary contract arising from a subsequent transfer of rights, or b it occurs after that subsequent transfer.

7 Where a transfer of rights relates to only part of the subject matter of the original contract, or to only some of the rights under that contract—

a a reference in subsection (3)(a) or (4) to the original contract, or a reference in subsection (6) to the secondary contract arising from an earlier transfer, is to that contract so far as relating to that part or those rights, and b that contract so far as not relating to that part or those rights shall be treated as a separate contract.

8 The effective date of a land transaction treated as entered into by virtue of subsection (3) is not earlier than the date of the transfer of rights.

9 In relation to a such a transaction—

a references in Schedule 7 (group relief) to the vendor shall be read as references to A;

b other references in this Part to the vendor shall be read, where the context permits, as referring to either A or B.

10 Section 1122 of the Corporation Tax Act 2010 (connected persons) applies for the purposes of subsection (3)(b).

11 In this section “ contract ” includes any agreement.