22.This section modifies section 3 of the 2024 Act to add new subsections (2A), (2B) and (4).
23.Under section 12 of the 2024 Act, a local authority may introduce a VL scheme to impose the levy for all or part of its area. Section 3 of the 2024 Act provides that the levy is to be charged in respect of a chargeable transaction. In this context, a “chargeable transaction” is a purchase for value of the right to reside in or at overnight accommodation situated within the area to which such a scheme relates for a period of one or more nights. But the levy becomes payable only if and when a person (“a visitor”) takes entry to such accommodation in pursuance of the transaction.
24.In some cases, an accommodation provider will sell a right to reside in or at overnight accommodation to a person (a “third party provider”) who intends to sell the right to another person. There may be a chain of one or more such transactions before the right is purchased by a visitor. Whilst each purchase for value of such a right is defined as a chargeable transaction (under existing section 3(2) of the 2024 Act), the levy is payable only if and when a visitor takes entry to accommodation in pursuance of the particular transaction (see section 3(1)(b) of the 2024 Act).
25.Where a third party provider is involved, there could be a chain of two or more chargeable transactions pursuant to which a visitor may take entry to overnight accommodation. In these circumstances, new subsections (2A) and (2B)(a) modify the 2024 Act so that the “chargeable transaction” is the initial transaction between the accommodation provider and the third party provider (and not any subsequent transaction, including the final one with the visitor). Additionally, in such cases, new subsection (2B)(b) makes it clear that, for the purposes of the 2024 Act, the visitor is to be treated as taking entry to the overnight accommodation in pursuance of the initial transaction, and that the visitor is to be treated as being provided overnight accommodation by the accommodation provider in pursuance of the initial transaction.
26.New subsection (4) provides definitions for the expressions “accommodation provider” and “third party” that are used in new subsections (2A) and (2B).
The Act Chargeable transactions Section 4 - Chargeable transactions: purchases by third parties