Finance Act 2003 s.73 – Alternative property finance: land sold to financial institution and re-sold to person

(1)This section applies where arrangements are entered into between [^F211a person^F211] and a financial institution under which—

(a)the institution—

(i) purchases a major interest in land (“the first transaction”), and

(ii) sells that interest to the [^F210 person ^F210] (“the second transaction”), and

(b)the [^F210person^F210] grants the institution a legal mortgage over that interest.

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

(a)the [^F210person^F210] concerned, or

(b)another financial institution by whom the interest was acquired under other arrangements of the kind mentioned in [^F217section 71A(1)^F218...^F217] entered into between it and the [^F210person^F210] .

(3)The second transaction is exempt from charge if the financial institution complies with the provisions of this Part relating to the first transaction (including the payment of any tax chargeable [^F219on a chargeable consideration that is not less than the market value of the interest and, in the case of the grant of a lease at a rent, the rent.^F219] ).

[^F220 (4)This section does not apply if—

(a)the [^F210 person^F210] enters into the arrangements as trustee and any beneficiary of the trust is not [^F211 a person^F211] , or

(b)the [^F210 person^F210] enters into the arrangements as partner and any of the other partners is not [^F211 a person^F211] .^F220]

(5)In this section—

^F221 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) “legal mortgage”—

(i)^F222in relation to land in England ..., means a legal mortgage as defined in section 205(1)(xvi) of the Law of Property Act 1925 (c. 20);

^F223 (ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii)in relation to land in Northern Ireland, means a mortgage by conveyance of a legal estate or by demise or sub-demise or a charge by way of legal mortgage.

(6)References in this section to [^F211a person^F211] shall be read, in relation to times after the death of the [^F210person^F210] concerned, as references to his personal representatives.

Definitions used in section 73 10

arrangements: 40 In this Part of this Schedule “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.
Defined in Sch.15 para.40 · see it in the full Act
major interest: (1) References in this Part to a “major interest” in land shall be construed as follows.
Defined in s.117(1) · see it in the full Act
land: “land” includes—

(a)
buildings and structures, and

(b)
land covered by water;

Defined in s.121 · see it in the full Act
the first transaction: 6B (1) This paragraph applies where section 72A (land in Scotland sold to financial institution and person in common) applies and the major interest in land purchased under the transaction mentioned in section 72A(1)(a) (“the first transaction”) consists of or includes a higher threshold interest.
Defined in Sch.4A para.6B(1) · see it in the full Act; (a) relief is claimed under paragraph 1 or 2 for a chargeable transaction (“the first transaction”), and
Defined in Sch.6ZA para.5(1) · see it in the full Act
vendor: (4) References in this Part to the “purchaser” and “vendor”, in relation to a land transaction, are to the person acquiring and the person disposing of the subject-matter of the transaction.
Defined in s.43(4) · see it in the full Act; (b) paragraph 8(1) (meaning of “vendor” where the transferee is the assignee under an assignment of rights) would apply but for paragraph 8(2) (exclusion of cases where the original contract is itself a free-standing transfer).
Defined in Sch.2A para.10(1) · see it in the full Act
the second transaction: (6) In this paragraph “the second transaction” has the same meaning as in section 71A, 72 or 73 (as the case requires).
Defined in Sch.4A para.6A(6) · see it in the full Act
tax: “tax”, unless the context otherwise requires, means tax under this Part.
Defined in s.121 · see it in the full Act
market value: (5) Section 118 (meaning of “market value”) does not apply to this paragraph.
Defined in Sch.9 para.7(5) · see it in the full Act; (1) For the purposes of this Part “market value” shall be determined as for the purposes of the Taxation of Chargeable Gains Act 1992 (c. 12) (see sections 272 to 274 of that Act).
Defined in s.118(1) · see it in the full Act; (2) This is subject to paragraphs 7(7) and 17(7) of Schedule 7A (which define “market value” for certain purposes of PAIF seeding relief and _dfnco-ownership scheme seeding relief).
Defined in s.118(2) · see it in the full Act; (5) Section 118 (meaning of “market value”) does not apply in relation to the reference in sub-paragraph (2)(e) above to the market value of the dwelling.
Defined in Sch.9 para.2(5) · see it in the full Act; (4) Section 118 (meaning of “market value”) does not apply in relation to the references in this paragraph to the market value of the dwelling.
Defined in Sch.9 para.4A(4) · see it in the full Act
lease: 5 In paragraphs 3 and 4 “lease” means any arrangements that provide for a ship to be leased or otherwise made available by one person to another.
Defined in Sch.32 para.5 · see it in the full Act
trustee: (6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).
Defined in Sch.7A para.19(6) · see it in the full Act; (6) In sub-paragraph (5) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected” persons: supplementary).
Defined in Sch.7A para.9(6) · see it in the full Act; (8) In sub-paragraph (7) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected persons”: supplementary).
Defined in Sch.4A para.5A(8) · see it in the full Act

Cases considering section 73 3

Project Blue Limited v Commissioners for Her Majesty’s Revenue and Customs

[2018] UKSC 30 · 13 June 2018Interprets

Considered as a comparable alternative-property-finance regime for which Parliament had made a specific sub-sale exception. (see paras [24]; [32]-[33]; [38]) Its similarly worded vendor condition assisted the comparison between alternative-finance exemptions and the section 45 sub-sale regime. (see paras [32]; [38]) The express exception for transactions exempt under this subsection demonstrated that Parliament had addressed one combined relief but had not then addressed section 71A. (see paras [32]; [38])

Project Blue Ltd v Revenue and Customs

[2016] EWCA Civ 485 · 26 May 2016Defines

The Court referred to section 73 as the alternative property finance provision involving purchase and resale of a major interest. (see paras [18], [33]) The exemption for the financial institution’s purchase depends on the vendor being the finance customer or person making the arrangements. The Court used this as statutory context for section 71A. (see para [18]) Cited only.

HM Revenue and Customs v DV3 RS Ltd Partnership

[2013] EWCA Civ 907 · 25 July 2013Limits

The alternative-finance exception to the section 45(3) disregard did not assist in construing the provision and did not overcome the express instruction to disregard completion of the original contract (see paras [17]; [26]-[27]).

What each judgment says about section 73 is in the case-law panel in the full Act.

Amendments and notes

10 notes from legislation.gov.uk

Amendments

F210Word in ss. 71A-73 substituted (with effect in accordance with s. 168(5) of the amending Act) by Finance Act 2006 (c. 25), s. 168(1)
F211Words in ss. 71A-73 substituted (with effect in accordance with s. 168(5) of the amending Act) by Finance Act 2006 (c. 25), s. 168(1)
F217Words in s. 73(2)(b) substituted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 5(2)
F218Words in s. 73(2)(b) omitted (with effect in accordance with s. 29(4) of the amending Act) by virtue of Scotland Act 2012 (c. 11), s. 44(2)(b)(3)(b), Sch. 3 para. 11(a) (with s. 29(5)(6)); S.I. 2015/637, art. 2
F219Words in s. 73(3) inserted (with effect in accordance with s. 168(5) of the amending Act) by Finance Act 2006 (c. 25), s. 168(3)
F220S. 73(4) ceased to have effect (with effect in accordance with s. 168(5) of the amending Act) by virtue of Finance Act 2006 (c. 25), s. 168(2)
F221S. 73(5)(a) omitted (with effect in accordance with Sch. 21 para. 6 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 21 para. 3(1)
F222Words in s. 73(5)(b)(i) omitted (1.4.2018 with effect in accordance with s. 16(4)(5) of the amending Act) by virtue of Wales Act 2014 (c. 29), s. 29(2)(b)(3), Sch. 2 para. 6; S.I. 2018/214, art. 2(a)
F223S. 73(5)(b)(ii) omitted (with effect in accordance with s. 29(4) of the amending Act) by virtue of Scotland Act 2012 (c. 11), s. 44(2)(b)(3)(b), Sch. 3 para. 11(b) (with s. 29(5)(6)); S.I. 2015/637, art. 2

Commencement

I44Pt. 4 wholly in force at Royal Assent subject to Sch. 19, see s. 124, Sch. 19 para. 1(1)