Application of LTTA and TCMA to certain persons and bodies

(section 33)

A company is defined as any body corporate or unincorporated association. It does not extend to partnerships or limited liability partnerships except as otherwise provided, for example, for group relief purposes a body corporate does include a limited liability partnership.

All actions of a company for the purposes of LTT (including actions required by TCMA where these actions  relate to land transactions) must be done through the proper officer of the company (usually the company secretary) or another person, normally an officer, authorised by the company to act on the company’s behalf in relation to its LTT affairs. That authority can be; express, implied, or apparent.

It should be this person that authorises the submission of the LTT return or amended return or who signs the declaration in a land transaction return or amended return.

In practice, an electronic return should be accepted as having been authorised for submission by a proper officer or person with the appropriate authority. Similarly, a paper return or amended return should be accepted provided that it contains a signature and there is no reason to doubt the authority of the person signing.

On this basis, the signature of any company official or employee can be accepted. This includes a member of an in-house legal team.

The treasurer or acting treasurer should normally sign a land transaction return or amended return from an unincorporated association.

Company in liquidation or administration

When a company is in liquidation or administration, different rules apply. The liquidator or administrator, as the case may be, must sign any returns or amended returns.

Special rules for companies

There are certain rules that apply specifically to transactions where the company is buyer:

• deemed market value rules, and 
• exceptions to the deemed market value rule.

(section 34)

When a unit trust scheme acquires land, the trustees of a unit trust scheme are treated as if they were a company for the purposes of filing returns and paying LTT.

However, certain rules that apply to companies do not apply to unit trust schemes and certain reliefs that may be claimed by companies cannot be claimed by a unit trust scheme: 

• the deemed market value rule, and
• group relief, reconstruction and acquisition reliefs.

The rights of unit holders are treated as if they are shares in the company. Therefore the issue, surrender and transfer of units within the scheme are not within the scope of LTT.

A unit trust scheme has the same meaning as in the Financial Services and Markets Act 2000 (see section 237 especially) and a unit holder means a person who is a participant in the unit trust scheme and is therefore entitled to a share of the investments subject to the trusts of a unit trust scheme.

An umbrella scheme is a unit trust scheme which has arrangements for separate pooling of the contributions of participants and the profits or income out of which payments are to be made and under which the participants are entitled to exchange rights in one pool for rights in another. A part of an umbrella scheme means such of the arrangements as relate to a separate pool.

Where there is an umbrella scheme each part is regarded as a separate unit trust and the scheme as a whole is not treated as a unit trust scheme for LTT purposes. Therefore, where a separate pool of an umbrella scheme acquires land, that pool is treated as a unit trust scheme in its own right and the trustees of that part will be treated as a company. Therefore, where one pool of an umbrella scheme transfers land to another pool of the same umbrella scheme a land transaction has occurred for LTT purposes and a return must be made if the transaction is notifiable.

(section 35)

Open-ended investment companies (‘OEICs’) are bodies corporate and companies. They are therefore treated in the same way as any other company for the purposes of LTT.

(section 36)

When a co-ownership authorised contractual scheme (‘CoACS’) acquires land, the scheme is treated as if it was a company for the purposes of filing returns and paying LTT.  

A CoACS means a ‘co-ownership scheme’ which is authorised for the purposes of the Financial Services and Markets Act 2000 by an authorisation order under section 261D of that Act. A ‘co-ownership scheme’ has the same meaning as in the Financial Services and Markets Act 2000 (see section 235A of the Act).

However, certain rules that apply to companies do not apply to CoACS and certain reliefs that may be claimed by companies cannot be claimed by a CoACS:

• the deemed market value rule, and
• group relief, reconstruction and acquisition reliefs.

The rights of the participants in the CoACS are treated as if they are shares in the company. Therefore the issue, surrender and transfer of participants interests within the scheme are not within the scope of LTT.

A CoACS is a collective investment scheme which is:

• constituted under the law of an EEA state (other than the UK) by a contract
• is managed by a body corporate incorporated under the law of an EEA state, and 
• is authorised under the law of an EEA state in a manner that complies with the definition of a CoACS.

An umbrella CoACS is a scheme which has arrangements for separate pooling of the contributions of participants and the profits or income out of which payments are to be made and under which the participants are entitled to exchange rights in one pool for rights in another. A sub-scheme of an umbrella scheme means such of the arrangements as relate to a separate pool.

Where there is an umbrella scheme each sub-scheme is regarded as a separate CoACS and the scheme as a whole is not treated as a single CoACS for LTT purposes. Therefore, where a sub-scheme of an umbrella scheme acquires land, that sub-scheme is treated as a CoACs in its own right and the operator is required to make any returns, etc. Therefore, where one pool of an umbrella scheme transfers land to another pool of the same umbrella scheme a land transaction has occurred for LTT purposes and a return must be made if the transaction is notifiable.

(section 37)

The rules apply to a land transaction where there are two or more buyers who are or will be jointly entitled to the interest acquired. The rules in relation to joint buyers apply to partnerships or trustees, subject to any special provisions relating to such partnerships and trustees.

Any obligation imposed on a buyer is generally imposed on the buyers jointly but may be discharged by any one of them (the requirements in relation to the return and the declaration are examples where this general rule does not apply.

Anything required or authorised by the LTT regime or required under the TCMA to be done in relation to the buyers must be done in relation to all of them.

Any liability of a buyer is joint and several, so a failure to submit a land transaction return and pay the tax due will attract interest and penalties which can be recovered from all or any of the joint buyers. This is despite any agreement between the individual joint buyers as to the payment of LTT or individual responsibility for the failure to comply with obligations under the LTTA or TCMA.

Joint buyers: returns and declarations

(section 38)

If the transaction is a notifiable transaction, a single land transaction return is required and the declaration that the land transaction return is complete and correct must be made by all the buyers.

Joint buyers: enquiries and assessments

(section 39)

When the WRA issues an enquiry notice into a return it must issue that notice to all joint buyers known to it.

When the WRA issues the notices requiring documents and information from a taxpayer during the course of an enquiry, they can be issued to individual buyers in relation to the land transaction entered into by that individual buyer when one of a number of joint buyers.

When the WRA issues a closure notice into a return, it must issue that notice to all joint buyers known to it.

Any one of the joint buyers may ask for a direction that a closure notice is issued. However, on such an application, all of the joint buyers are entitled to be a party to that application.

A WRA determination must be made by the WRA in the name of all the joint buyers known to it, and is not valid if this is not done. However, if there are more buyers than those identified in the determination the absence of those people does not make the determination invalid, if they were unknown to the WRA at the time of making the determination.

Similarly, a WRA assessment must be made by WRA in the name of all the joint buyers known to it, and is not valid if this is not done. Again, if there are more buyers than those identified in the assessment the absence of those people does not make the assessment invalid, if they were unknown to the WRA at the time of making the determination.

Joint buyers: appeals and reviews

(section 40)

If an appealable decision is made by the WRA, a request for a review or an appeal may be made by any of the buyers but can only be settled with the agreement of all the buyers and a decision binds them all.

Where a review is undertaken by WRA as a result of a request for review of an appealable decision by one or more of the buyers, but not by all of the buyers, the WRA must:

• issue a notice of the review to each of the buyers who did not make the request for a review. This is important so that all the buyers are aware of the review.
• allow any of those buyers who did not make the request for the review be a party to the review if they notify WRA that they wish to be such a party.  
• issue the notice of the WRA’s conclusions to each buyer whose identity is known to the WRA.

The effect of the WRA‘s conclusions of a review apply to all buyers.

Where an appeal against an appealable decision is made to the tribunal by one or more of the buyers but not all of them, the WRA must:

• issue a notice of appeal to each of the buyers who did not make the appeal. This is important so that all the buyers are aware of the appeal.

Any of those buyers who did not make the appeal are entitled to be parties to the appeal, and the tribunal’s decision applies to all buyers.

Finally, a settlement agreement can only be reached with all buyers. Therefore if one buyer is not prepared to enter into the settlement agreement, the matter will need to be finalised through the appeal process.

(section 43)

A person may act in a representative capacity to perform functions, including making returns and dealing with correspondence.   

Personal representatives

The personal representatives of a person who is the purchaser under a land transaction are responsible for discharging the obligations of the purchaser in relation to the transaction. They may deduct any payment made by them in respect of LTT or amounts charged for interest and penalties out of the assets and effects of the deceased person.

Receiver appointed by a UK court

Such a receiver having direction and control of any property is responsible for discharging any obligations in relation to a transaction affecting that property, as if the property were not under the direction and control of the court.

Parent or guardian of a minor

A minor cannot make the declaration on a tax return nor represent themselves in other matters with the WRA (enquiries etc.). Therefore a parent or guardian is responsible for discharging any obligations of the minor that are not discharged by the minor themselves (for example payment of the tax).