BIM41095 - Receipts: reverse premiums: meaning of a ‘relevant transaction’ and ‘property transaction’

Relevant transaction

The legislation imposes a charge when a person receives an inducement to enter into a relevant transaction. A relevant transaction is one whereby the person receiving the benefit becomes entitled to an estate or interest in or a right in or over land (FA99/SCH6/PARA1 (1)(b)).

The legislation imposes a charge on an inducement received by a person connected with the person who enters into the relevant transaction (FA99/SCH6/PARA1 (1)(a)).

The expression relevant transaction as defined above encompasses far more than the grant of a lease that is the prime target of the legislation. It includes, for example, the conveyance of a freehold, the assignment of an existing lease or the grant of an easement or licence to occupy.

The width of the term relevant transaction is, however, considerably cut down by limiting the charge to a payment made or other benefit provided by the person who granted the interest in land. This is considered further in BIM41100 - BIM41110.

Property transaction

A ‘relevant transaction’ is called a ‘property transaction’ in the definition of a reverse premium in ITTOIA05/S99.