Section 71A — Finance Act 2003: Alternative property finance: land sold to financial institution and leased to person

Alternative property finance: land sold to financial institution and leased to person 71A 1 This section applies where arrangements are entered into between a person and a financial institution under which—

a the institution purchases a major interest in land or an undivided share of a major interest in land (“ the first transaction ”),

b where the interest purchased is an undivided share, the major interest is held on trust for the institution and the person as beneficial tenants in common, c the institution (or the person holding the land on trust as mentioned in paragraph (b)) grants to the person out of the major interest a lease (if the major interest is freehold) or a sub-lease (if the major interest is leasehold) (“ the second transaction ”),

and d the institution and the person enter into an agreement under which the person has a right to require the institution or its successor in title to transfer to the person (in one transaction or a series of transactions) the whole interest purchased by the institution under the first transaction.

2 The first transaction is exempt from charge if the vendor is—

a the person , or b another financial institution by whom the interest was acquired under arrangements of the kind mentioned in subsection (1) entered into between it and the person .

3 The second transaction is exempt from charge if the provisions of this Part relating to the first transaction are complied with (including the payment of any tax chargeable).

4 Any transfer to the person that results from the exercise of the right mentioned in subsection (1)(d) (“ a further transaction ”) is exempt from charge if—

a the provisions of this Part relating to the first and second transactions are complied with, and b at all times between the second transaction and the further transaction—

i the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and ii the lease or sub-lease granted under the second transaction is held by the person .

5 The agreement mentioned in subsection (1)(d) is not to be treated—

a as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred (and accordingly section 44(5) does not apply), or b as a distinct land transaction by virtue of section 46 (options and rights of pre-emption).

6 The requirements of subsection (1), or (4)(b)(ii), are not met if—

a the person enters into the arrangement, or holds the lease or sub-lease, as trustee and any beneficiary of the trust is not a person , or b the person enters into the arrangements, or holds the lease or sub-lease, as partner and any of the other partners is not a person .

7 A further transaction that is exempt from charge by virtue of subsection (4) is not a notifiable transaction unless the transaction involves the transfer to the person of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction. 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9 References in this section to a person shall be read, in relation to times after the death of the person concerned, as references to his personal representatives. 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .