Chapter 2: Proposed Statutory Instrument
16. A draft statutory instrument to give effect to the proposed change is set out for consideration at Annex A.
17. The draft instrument is intended to provide that group relief will be available if shares in a relevant subsidiary company are mortgaged by a legal or equitable charge, so long as the contingency allowing the mortgage to be called up does not arise. In addition, it is intended to give the same relief in the case of an arrangement in Scotland analogous to a pledge but with rights in shares or securities transferred to a creditor, subject to the creditor’s obligation to retransfer the rights back to the debtor if certain conditions are met.
Question 1: Do you agree that the draft instrument provided for in Annex A will achieve an outcome consistent with the equivalent group relief arrangements available under SDLT? If not, please provide comment, providing any relevant suggestions for legislative amendment.
18. In addition to the General Anti-Avoidance Rule, Schedule 10 of the Act provides for a specific targeted anti avoidance rule. It is important to ensure that any amendment to the legislative arrangements for LBTT do not inadvertently introduce new opportunities to avoid tax or reduce the practical effectiveness of existing targeted arrangements.
Question 2: Do you consider that the proposed amendment to the legislation will reduce the effectiveness of existing arrangements or result in any new areas of potential tax avoidance?
Question 3: Do you have any other comments, not covered by the previous questions, on the draft legislation in Annex A?