Transactions entered into before completion of contract
Part 4 Stamp duty land tax
Schedule 2A contains—
(a)provision about the application of section 44 (contract and conveyance) in certain cases where an assignment of rights, subsale or other transaction is entered into without the contract having been completed, and
(b)other provision about such cases.F61]
(5) In this paragraph “substantially performed” and “completed” have the same meanings as in section 44 (contract and conveyance) .
Defined in Sch.17A para.12A(5) · see it in the full ActConstrued as the sub-sale regime which disregarded the original completion and, when combined with section 71A, created the tax loss addressed by section 75A. (see paras [12]; [35]; [39]; [48]) Applied as part of the sub-sale relief which prevented a separate charge on the original purchaser’s transfer of rights. (see paras [12]; [35]) The subsection created a secondary contract and disregarded completion of the original contract. Its disregard did not alter the real-world vendor under section 71A but contributed to the section 75A tax loss. (see paras [12]; [30]; [35]; [46]-[55]) Its special rules for identifying a vendor supported the conclusion that the section 45(3) disregard did not itself determine the vendor for every Part 4 provision. (see paras [32]; [36]-[37]) The express identification of the original vendor for group relief showed that the section 45(3) disregard did not already produce that result generally. (see para [32]) Section 71A did not depend on this contextual vendor rule. Even if it applied, the relevant context concerned the real-world sale to the financial institution. (see paras [36]-[37])
Section 45 was interpreted as creating a notional secondary contract in a subsale-type arrangement, with chargeable consideration determined under section 45(3)(b). (see paras [26]; [38]; [49]-[52]) Section 45(3) was applied so that the notional secondary contract treated the transferee as purchaser and calculated consideration by reference to the original contract and the transfer of rights. (see paras [38]-[41]; [49]) Section 45(3)(b) was applied to include the relevant consideration under the original contract and any consideration for the transfer of rights. The dispute centred on whether the purchase price was given directly or indirectly by the transferee or a connected person. (see paras [49]-[52]) Section 45(3)(b)(i) was applied to treat the purchase price as consideration indirectly given by the transferees through their controlled vehicle; alternatively, it was consideration given by a connected person. The issue was fact-sensitive. (see paras [52]-[63])
Interprets section 45 as a relieving provision modifying section 44 to prevent a double SDLT charge where contractual rights are transferred before completion. It does not provide a general mechanism for avoiding SDLT through an unexercised option. (see paras [34]-[57]) Interprets section 45(1)(a) as requiring an original contract that is to be completed by a conveyance, thereby bringing the original contract within section 44. (see paras [35]-[36]) Interprets section 45(1)(b) as requiring a transaction under which the further purchaser has become presently entitled to call for a conveyance. An unexercised option does not meet that statutory description without more. (see paras [36]-[38]; [49]-[52]) Confirms that section 45 operates by modifying the application of section 44. Its provisions must therefore be read with section 44 and its concepts of completion and substantial performance. (see paras [39]; [56]) Interprets section 45(3) as creating a deemed secondary contract, not converting the actual option agreement into that contract. Completion or substantial performance of the deemed contract must correspond to a real-world transaction with the further purchaser. (see paras [40]-[50]) Applies section 45(3)(b)(i) only where consideration under the original contract is given directly or indirectly by the further purchaser or a connected person. The parties were unconnected and no such consideration was provided, so the limb was not engaged. (see paras [59]-[60]) The court did not determine the precise consideration under this limb because the option was not a transfer of rights within section 45. On the assumed hypothesis, the option premium did not overcome the absence of a qualifying conveyance transaction. (see para [60])
What each judgment says about section 45 is in the case-law panel in the full Act.