Finance Act 2003

[F119[F2(1)In the application of this Part to Scotland—U.K.

(a)any reference to the term of a lease is to the period of the lease, and

(b)any reference to the reversion on a lease is to the interest of the landlord in the property subject to the lease.

[F3(2)Where in Scotland there is a lease constituted by concluded missives of let (“the first lease”) and at some later time a lease is executed (“the second lease”), the first lease is to be treated for the purposes of this Part as if it were a lease granted—

(a)on the date the missives of let were concluded,

(b)for a period which begins with that date and ends at the end of the period of the second lease, and

(c)in consideration of the total rent payable over that period and any other consideration given for the first lease or the second lease.

(2A)Where sub-paragraph (2) applies the grant of the second lease is disregarded for the purposes of this Part except section 81A (return or further return in consequence of later linked transaction).

(2B)For the purposes of section 81A—

(a)the grant of the first lease and the grant of the second lease are linked (whether or not they would be linked by virtue of section 108),

(b)the lessee under the second lease (rather than the lessee under the first lease) is liable for any tax or additional tax payable in respect of the first lease lease as a result of sub-paragraph (2), and

(c)the reference in section 81A(1)(a) to “the purchaser under the earlier transaction” is to be read, in relation to the first lease, as a reference to the lessee under the second lease.]

(3)Where in Scotland—

(a)there is an agreement (including missives of let not constituting a lease) under which a lease is to be executed, and

(b)the agreement is substantially performed without a lease having been executed,

the agreement is treated as if it were the grant of a lease in accordance with the agreement (“the notional lease”), beginning with the date of substantial performance.

The effective date of the transaction is when the agreement is substantially performed.

[F4(4)Where sub-paragraph (3) applies and at some later time a lease (“the actual lease”) is executed, this Part applies as if the notional lease were a lease granted—

(a)on the date the agreement was substantially performed,

(b)for a period which begins with that date and ends at the end of the period of the actual lease, and

(c)in consideration of the total rent payable over that period and any other consideration given for the agreement or the actual lease.

(4A)Where sub-paragraph (4) applies the grant of the second lease is disregarded for the purposes of this Part except section 81A (return or further return in consequence of later linked transaction).”

(4B)For the purposes of section 81A—

(a)the grant of the notional lease and the grant of the actual lease are linked (whether or not they would be linked by virtue of section 108),

(b)the lessee under the actual lease (rather than the lessee under the notional lease) is liable for any tax or additional tax payable in respect of the notional lease as a result of sub-paragraph (4), and

(c)the reference in section 81A(1)(a) to “the purchaser under the earlier transaction” is to be read, in relation to the notional lease, as a reference to the lessee under the actual lease.]

(5)References in sub-paragraphs (2) to (4) to the execution of a lease are to the execution of a lease that either is in conformity with, or relates to substantially the same property and period as, the missives of let or other agreement.

(6)Where sub-paragraph (3) applies and the agreement is (to any extent) afterwards rescinded or annulled, or is for any other reason not carried into effect, the tax paid by virtue of that sub-paragraph shall (to that extent) be repaid by the Inland Revenue.

Repayment must be claimed by amendment of the land transaction return made in respect of the agreement.]]