We run a wholesale nursery business based on agricultural land and are in LLP partnership with the land owners on an 11 /89% share. The business pays for the use of the land through a profit split at the above rate. The landowning partners have the 11% share and do not have any input into the business other than providing the land. The land is separate from their dwelling.
The landowners are seeking to the sell the land, preferably for development, but the partnership agreement precludes the sale of the land whilst the business is in occupation. The 89% partners wish to sell the business on the land in order to retire from it and have two potential purchasers waiting to buy.
The sale of the land alone, would benefit only the landowning partners. They are unwilling to pay sufficient compensation to incentivise us (89%partners) to give up the business.
It is in our interests therefore to pursue the sale of the business assets to the third party.
The question is therefore:
Are there any financial or tax benefits to the partners on either (11 or 89%) side if the LLP buys the land from the 11% partners (who would then resign their partnership) before the LLP then re-sold the whole (business + land) to the new purchasers?
As an alternative to this outright purchase by the new party, would it be preferable to incorporate them into the LLP as New Partners with a gradual transfer of assets or share in the form of an earn-out? How would this method affect the need to pay either CGT or Land Tax Stamp Duty? Would the 89% partners have a CGT liability if they acquire the share of the 11% partners?
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