Taxation (Enveloped Property
Transactions) (Jersey) Law 2022
A LAW to provide for the taxation of
certain transactions by which control of an entity which owns certain land in
Jersey is transferred from one person to another; and for connected purposes.
Commencement
[see endnotes]
1 Interpretation
(1) In
this Law, unless the context otherwise requires –
“the 1961 Law” means
the Income
Tax (Jersey) Law 1961;
“the Commissioners” means
Commissioners of Appeal appointed under Article 5 of the Revenue
Administration (Jersey) Law 2019;
“Comptroller” has the same
meaning as in the Revenue
Administration (Jersey) Law 2019;
“controlled entity” is
construed in accordance with Article 3(5);
“enveloped property” means
land in Jersey –
(a) which is owned by a
person who is not an individual; or
(b) in respect of which the
lessee under a contract lease of the land is a person who is not an individual;
“market value” is
construed in accordance with Article 7(7);
“Minister” means the
Minister for Treasury and Resources;
“significant interest” is
construed in accordance with Article 3(2);
“prescribed” means
prescribed by Order made by the Minister;
“relevant transaction” is
construed in accordance with Article 3.
(2) Except
in subparagraph (a) of the definition enveloped property, a reference (however
expressed) to a person who owns enveloped property includes a reference to a
lessee under a contract lease of enveloped property.
(3) For
the purposes of this Law –
(a) a reference to domestic
use must be construed as a reference to use for domestic purposes in accordance
with the Rates
(Jersey) Law 2005;
(b) a reference to
non-domestic use must be construed as a reference to use for non-domestic
purposes in accordance with that Law;
(c) any question whether land
is used for domestic or non-domestic purposes is determined in accordance with
the use indicated in the Rates List maintained and kept under that Law for the
parish in which the land is situated at the date of the relevant transaction.
(4) Paragraph (3)(c)
is subject to Article 5.
2 Enveloped property
transaction tax
A tax to be known as
“enveloped property transaction tax” is charged and due, under this Law, on a
transaction to which this Law applies (a relevant transaction).
3 Relevant transactions
(1) A
transaction is a relevant transaction if –
(a) it transfers to a person
an interest in an entity;
(b) the effect of the
transfer is to confer on the person a significant interest in the entity; and
(c) the entity, or any entity
over which it has control (a controlled entity), is the beneficial owner of
enveloped property the market value of which exceeds –
(i) if the enveloped property is used for
domestic purposes, £500,000, and
(ii) if the enveloped
property is used for non-domestic purposes, £700,000.
(2) A
person has a significant interest in an entity if the person owns or controls
more than 50% of the interest in the entity.
(3) For
the purposes of paragraph (2), a person owns or controls more than 50%
of the interest in a controlled entity if –
(a) the person owns or
controls more than 50% of the interest in the controlling entity; and
(b) the controlling entity
owns or controls more than 50% of the interest in the controlled entity.
(4) An
interest in an entity includes –
(a) shares in a company;
(b) a beneficial interest in
any other body or partnership.
(5) An
entity is a controlled entity if –
(a) in the case of a company,
another entity owns or otherwise controls a majority of the voting rights in
the company;
(b) in any other case,
another entity controls the activities or business of the entity.
(6) It
is immaterial whether an entity is established in Jersey or has a place of
business there.
(7) The
Minister may, by Order, amend a figure mentioned in paragraph (1)(c) to
take account of changes in the value of money.
(8) A
transaction to which the Taxation (Land
Transactions) (Jersey) Law 2009 applies is not a relevant transaction.
4 Connected persons
(1) For
the purposes of Article 3(1)(b) a transfer also confers a significant
interest in an entity if –
(a) a person (“A”) holds
or acquires an interest in an entity;
(b) another person (“B”)
with whom A is connected also acquires an interest in the entity;
(c) in consequence of the
acquisition mentioned in paragraph (b), the holdings of A and B in
aggregate constitute a significant interest in the entity.
(2) Any
question whether a person is connected with another is determined in accordance
with Article 3A of the 1961 Law.
5 Enveloped property
deemed to be in non-domestic use
(1) Paragraph (2)
applies if –
(a) enveloped property comprises 2 or more
areas or units of land each of which is separately listed for the purposes of
the Rates (Jersey) Law 2005;
(b) at
least one of the areas or units is listed as being in domestic use and at least
one other is listed as being in non-domestic use; and
(c) each
of the areas or units is physically attached to or immediately adjacent to at
least one other such area or unit.
(2) All
of the enveloped property must be treated for the purposes of this Law as being
listed as in non-domestic use.
(3) In
this Article, “land” has the same meaning as in the Rates (Jersey) Law 2005.
6 Excluded transactions
(1) This
Law does not apply to a transaction or description of a transaction specified
in Schedule 1.
(2) The
States may, by Regulations, amend Schedule 1.
7 Calculation of charge
to tax
(1) The
tax chargeable and due in respect of a relevant transaction is £90 + Y,
where “Y” is the amount found in accordance with column 2 of Table A
or, as the case may be, Table B or C in Schedule 2.[1]
(2) In
Table A in Schedule 2 –
(a) column 1 sets out
ranges of market value of enveloped property used for non-domestic purposes;
(b) column 2 sets out
the calculation of the variable element of the amount of tax in respect of the
market value range to which it relates.
(3) In
Table B in Schedule 2 –
(a) column 1 sets out
ranges of market value of enveloped property used for domestic purposes;
(b) column 2 sets out
the calculation of the variable element of the amount of tax in respect of the
market value range to which it relates for properties to which the standard
rate applies;
(c) column 3 sets out
the calculation of the variable element of the amount of tax in respect of the
market value range to which it relates for properties to which the higher rate
applies.[2]
(4) In
Table C in Schedule 2 –
(a) column 1 sets out
the ranges of annual rental payable on enveloped property which is held under a
contract lease;
(b) column 2 sets out
the calculation of the variable element of the amount of tax in respect of the
annual rental range to which it relates for properties to which the standard
rate applies;
(c) column 3
sets out the calculation of the variable element of the amount of tax in
respect of the market value range to which it relates for properties to which
the higher rate applies.[3]
(4A) In paragraphs (3) and (4) –
(a) the higher rate applies
where a significant interest in an entity is acquired by a person, and that
entity or its controlled entity own a property that is a dwelling acquired for
a purpose other than use as the main residence of the person by whom the
significant interest is acquired, but does not apply where the dwelling is
acquired for the purpose of it forming part of the stock of a trade taxable
under Article 51(1)(b) of the 1961 Law; and
(b) the standard rate applies
to a dwelling to which the higher rate does not apply,
and in this paragraph “main residence” means the property that is
occupied as the main residence whether or not it is in Jersey.[4]
(5) Paragraph (6)
applies if –
(a) in consequence of a
transaction or a series of transactions, two or more connected persons acquire
interests in an entity;
(b) the aggregate value of
the interests amounts to a significant interest.
(6) The
tax payable by each connected person is the proportion of the total amount of
tax charged and due which represents the proportion of significant interest
acquired by the person concerned.
(7) The
market value is –
(a) the unencumbered value at
the date of the transaction of the enveloped property;
(b) in the case of enveloped
property which is held under a contract lease, the amount found under
paragraphs (8) and (9).
(8) The
amount is –
£(AR x YR)
Where –
AR is the amount of the
annual rental payable in respect of the lease;
YR is whichever is the
lower of –
(a) the number of years
remaining in the term of the lease at the date of the relevant transaction; or
(b) 21.
(9) If
the amount of the annual rental payable in respect of a lease is less than the
amount that would be expected to be paid under normal market conditions as
rental for the property (amount A), AR in paragraph (8) is
amount A.
(10) For
the purposes of paragraph (7), no account must be taken of any debts or
other liabilities of –
(a) the entity which owns the
enveloped property;
(b) if the entity is a
company, any other company with which it is connected;
(c) if the entity is not a
company, any other entity in which the beneficial ownership is held by the same
person who has beneficial ownership of the first entity or by a person
connected with that person;
(d) if the entity is a
controlled entity, the entity by which it is controlled.
(11) The
States may by Regulations amend Schedule 2.
8 Duty to deliver
statement and pay tax
(1) A
person who acquires a significant interest in an entity in consequence of a
relevant transaction must, in respect of the transaction, deliver to the
Comptroller –
(a) a statement containing
the prescribed information;
(b) such documents or copies
as may be prescribed;
(c) the amount of tax charged
and due on the transaction.
(2) The
statement and amount of tax must be delivered not later than 28 days after
the transaction takes place.
(3) The
statement must include a declaration by the person delivering it that the
statement is, to the best of the person’s knowledge and belief, true, complete
and correct.
9 Statement by owner of
enveloped property
(1) This
Article applies if –
(a) an entity is registered,
established or has a place of business in Jersey;
(b) the entity, or a
controlled entity of it, owns enveloped property; and
(c) a relevant transaction
takes place in relation to the entity.
(2) The
entity must deliver to the Comptroller a statement –
(a) that a significant
interest has been acquired in the entity;
(b) of the name of the person
who has acquired the significant interest.
(3) A
statement under paragraph (2) –
(a) must be made not later
than 28 days after the relevant transaction takes place;
(b) must contain such other
information and be in such form as may be prescribed.
(4) Paragraph (2)
does not apply if a statement has been delivered to the Comptroller under
Article 8.
10 Delivery of statements
under a notice
(1) The
Comptroller may, by notice served on a person, require the person to provide a
statement of the following –
(a) whether, during the
period specified in the notice, the person has acquired or disposed of an
interest in an entity which owns enveloped property;
(b) the name and address of
the person from whom the interest was acquired;
(c) the name and address of
the person to whom the interest was disposed;
(d) the date of the
transaction;
(e) the address of the
enveloped property;
(f) the name and address of
the entity;
(g) the name and address of
any entity which, directly or indirectly, has an interest in the enveloped
property;
(h) such other information as
the Comptroller reasonably requires to enable a determination as to whether a
liability to tax under this Law arises.
(2) The
statement must include a declaration by the person that to the best of the
person’s knowledge or belief the statement –
(a) contains all of the
particulars required by the notice;
(b) is true, complete and
correct.
(3) The
statement must be provided within the time specified in the notice.
11 Power of Comptroller to
make assessment of tax
(1) Paragraph (2)
applies if it appears to the Comptroller that a relevant transaction has taken
place, but –
(a) Article 8 has not
been complied with; or
(b) a statement delivered
under Article 8 contains information which is false or misleading in a
material particular.
(2) The
Comptroller may make an assessment, on the person required to comply with
Article 8, of the tax due and charged on the transaction.
(3) If
the Comptroller is of the opinion that the main purpose, or one of the main
purposes, of a transaction or of a combination or series of transactions is the
avoidance or reduction of the liability of a person to tax under this Law, the
Comptroller may make such assessment or additional assessment of tax on the
person as the Comptroller thinks appropriate to counteract the avoidance or
reduction of liability.
(4) If
the Comptroller raises an assessment of tax under this Article –
(a) the Comptroller must
serve on the person assessed a notice in writing of the assessment;
(b) the tax due under the
assessment must be paid not later than 28 days after the date of the
notice.
(5) A
notice under paragraph (4) must include –
(a) the amount of the
assessment;
(b) the means by which and
latest date on which an appeal against the assessment may be made.
12 Service of documents
(1) Any
document which the Comptroller may or is required to deliver to a person under
this Law may be delivered to the person –
(a) by sending it to the
person’s usual or last known address;
(b) if the person is a company,
by sending it to its registered office;
(c) if the person is a
business, by sending it to its principal place of business or last known
principal place of business;
(d) if the person is an
unincorporated body –
(i) by sending it to a partner, member of the
committee or similar governing body, manager, director or similar officer, or
(ii) by sending it to the
body’s last known address or place of business.
(2) It
is immaterial whether an address is in Jersey or elsewhere.
13 Late payment surcharge
(1) This
Article applies if a person who is required to pay tax under Article 8
fails or refuses to pay the tax due at the time required by that Article.
(2) The
person is charged with and due for a surcharge of 10% of the amount of tax
to be paid under Article 8.
(3) The
Comptroller may waive or reduce the amount of the surcharge if –
(a) failure to pay the tax
due under Article 8 at the time required is caused by the action of a
person not connected with the person mentioned in paragraph (1) and the
failure is remedied without delay; or
(b) the Comptroller is
satisfied that death, serious illness or other grave and exceptional
circumstances prevented payment at the time required by that Article.
(4) The
Comptroller must issue a written notice to a person of his or her liability to
pay the surcharge under paragraph (2).
(5) Not
later than 40 days after the issue of a notice under paragraph (4),
the person may apply in writing to the Comptroller for a waiver or reduction as
mentioned in paragraph (3).
(6) Where
a person applies under paragraph (5), the Comptroller must give notice to
the person as to whether the Comptroller has waived or reduced the person’s
liability.
14 Issue of receipt for tax
(1) The
Comptroller must issue a receipt in respect of the payment of tax under
Article 8 or 11.
(2) A
receipt must be marked with a unique number.
15 Duty to keep records
(1) An
entity which owns enveloped property must –
(a) keep such records as may
be required to verify the information required to be contained in a statement
delivered under Article 8, 9 or 10;
(b) preserve the records in
accordance with this Article.
(2) The
records must be preserved for the period of 6 years after the date of the
relevant transaction to which they relate.
(3) The
records required to be kept and preserved include –
(a) relevant documents
relating to the transaction;
(b) records of relevant
payments, receipts and financial arrangements.
(4) The
duty to preserve records may be satisfied by the preservation of the
information contained in them.
(5) Where
information is preserved under paragraph (4), a copy of any document
forming part of the records is admissible in proceedings before the
Commissioners to the same extent as the records themselves.
16 Proceedings for recovery
of tax
(1) Proceedings
for the recovery of unpaid tax or for the recovery of a surcharge imposed under
Article 13 may be instituted by the Treasurer of the States at any time
after the expiry of the period specified in Article 8(2), 11(4) or 13(5)
as the case may be.
(2) Article 43
of the 1961 Law applies where judgment has been obtained for the payment
of tax or a surcharge due under this Law by an individual as it applies where
judgment has been obtained for payment of arrears of income tax by an
individual.
(3) Article 44
of the 1961 Law applies for the purpose of the recovery by legal process
of tax or a surcharge due under this Law as it applies for the purposes of the
recovery by legal process of income tax.
17 Penalties for failure to
deliver statements and provision of inaccurate information
(1) A
person who fails to deliver a statement required by Article 8, 9 or 10 is
liable to a penalty not exceeding £3,000.
(2) A
person is not liable to a penalty under paragraph (1) if the person
satisfies the Comptroller or, on an appeal under Article 19, the
Commissioners, that there is a reasonable excuse for the failure.
(3) If
a person had a reasonable excuse for a failure but the excuse has ceased, the
person is to be treated as having continued to have the excuse if the failure
is remedied without unreasonable delay after the excuse has ceased.
(4) If
a person becomes liable to a penalty under paragraph (1), the Comptroller
may determine the amount of the penalty and impose it on the person.
(5) If
the Comptroller imposes a penalty, the Comptroller must notify the
person –
(a) of the reasons for
imposing the penalty;
(b) of the amount of the
penalty;
(c) of the person’s right of
appeal under Article 19.
(6) The
Comptroller must not impose a penalty more than 6 years after the date on
which the person becomes liable to the penalty.
(7) Part 4
of the Revenue
Administration (Jersey) Law 2019 applies to a statement under
Article 8 as it applies to a return within the meaning of that Part
subject to the following modifications –
(a) sub-paragraph (d) of
Article 10 of that Law is ignored and other references to a return must be
construed as references to a statement under Article 8 of this Law;
(b) Article 12(3) of
that Law is ignored;
(c) in Article 13(3) of
that Law, references to the Income Tax Law must be construed as references to
this Law, and the reference to Article 41I of the Income Tax Law must be
construed as a reference to Article 13 of this Law;
(d) in Article 15 of
that Law, references to Article 137 of the Income Tax Law must be
construed as references to Article 18 of this Law.
18 Offences
(1) A
person commits an offence and is liable to imprisonment for a period of
12 months and to a fine of level 3 on the standard scale if the
person –
(a) delivers a statement
under Article 8(1)(a) which the person knows to be false or misleading in
a material particular;
(b) delivers a document or
copy of a document under Article 8(1)(b) which the person knows to be
false or misleading.
(2) In
paragraph (3) –
“relevant offence” means
an offence under this Article that is committed by a limited liability
partnership, a separate limited partnership, an incorporated limited
partnership or another body corporate;
“relevant person” means –
(a) if the relevant offence
is committed by a limited liability partnership, a partner of the partnership;
(b) if the relevant offence
is committed by a separate limited partnership or an incorporated limited
partnership –
(i) a general partner, or
(ii) a limited partner who is
participating in the management of the partnership;
(c) if the relevant offence
is committed by a body corporate other than an incorporated limited
partnership –
(i) a director, manager, secretary or other
similar officer of the body corporate, and
(ii) if the affairs of the
body corporate are managed by its members, a member who is acting in connection
with the member’s functions of management; and
(d) a person purporting to
act in any capacity described in sub-paragraphs (a) to (c) in relation to
the partnership or body that commits the relevant offence.
(3) If a relevant offence is proved to have been committed with the
consent or connivance of a relevant person, that relevant person is also guilty
of the offence and liable in the same manner as the partnership or body
corporate to the penalty provided for that offence.
19 Right of appeal
(1) A
person aggrieved by a decision of or assessment made by the Comptroller under
this Law may appeal to the Commissioners by giving notice in writing to the
Comptroller not later than 40 days after the date of the notice of the
decision or assessment.
(2) In
the case of a person aggrieved by an assessment or additional assessment under
Article 11(2) or (3), the grounds for appeal include that –
(a) the avoidance or
reduction of his or her liability to tax under this Law was not the main
purpose or one of the main purposes of the transaction or combination or series
of transactions;
(b) the transaction was a
bona fide commercial transaction, or the combination or series of transactions
were bona fide commercial transactions, not designed for the purpose of
avoiding or reducing liability to tax under this Law;
(c) he or she has been
overcharged by the assessment or additional assessment.
(3) If
the Comptroller is satisfied that, owing to absence, sickness or other
reasonable cause, a person was prevented from appealing in the time specified
in paragraph (1), the Comptroller may admit the appeal if notice is given
by the person without undue delay.
(4) Part 6
of the 1961 Law applies, with the necessary modifications to an appeal
under paragraph (1) as it applies to an appeal under Article 27(1) of
that Law.
20 [5]
21 [6]
22 Citation and commencement
(1) This
Law may be cited as the Taxation (Enveloped Property Transactions) (Jersey) Law
2022.
(2) This
Law comes into force on 4th April 2022.