From April 2018, Wales will adopt the new levy. Following the introduction, from April 2016, of higher rates of SDLT and Land and Building Transaction Tax (LBTT) on purchases of additional residential properties, the Welsh Government Treasury Paper 5 sought views on the Welsh policy approach to the higher rates for LTT purposes.

In its response to the consultation, the CIOT along with the Stamp Taxes Practitioners Group (STPG) said it is ‘not entirely clear… whether the policy intent is to deter the purchase of additional residential properties (so that in fact lower revenue attributable to higher rates in Wales would represent a fulfilment of the policy) or to raise revenue which may be applied to building good quality, affordable housing’.

In a statement, the CIOT adds: ‘The need for a clear understanding of the policy objective underpins not only the practical application of the higher rates (in terms of interpretation by taxpayers and their advisers and guidance issued by the Welsh Revenue Authority) but also the approach taken in framing the proposed overarching general anti-avoidance rule (GAAR) in the Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Bill.’ 

The institute further notes that in order to determine whether a tax structure is artificial and caught by GAAR, it is’ necessary to be clear on the intent behind the legislation when enacted’.

It also raised concern over the burden of administering the complexities of the higher rates, which it says will fall largely on conveyancers who may not have tax expertise.

The CIOT has been invited to give evidence to the Finance Committee of the Welsh Assembly in October.

The Welsh Treasury Paper 5 Land Transaction Tax: Higher Rates for Additional Residential Purposes can be read here.