SDLT and transfer to limited company

by **Lee Young** on Fri Oct 28, 2011 3:04 pm

Help please!!

I have a question on SDLT to which I cant work out the answer and I am hoping someone who has a greater understanding of this tax can help.

The history is that partners A, B and C made a declaration of trust some time in the past over the building from which their partnership trades (when this was done I do not know but I will assume that it was done c20 years ago), that they held the legal title on trust for the partnership. In time the partnership coverted to an LLP and has now incorporated itself into a limited company.

All the while the bank had a charge over the property and now, following incorporation, they want the legal title in the name of the company rather than the trustees.

In effecting the transfer from A, B and C to the limited company will SDLT be payable? Section 53 of the FA 2003 seems to be in point and it would seem none of the exclusions will apply and therefore market value must be used to determine the SDLT, in which case a 4% tax charge will apply.

There is probably a simple answer to this but I can't see it yet! Any help/guidance/pointers gratefully received!

Lee

by **section 44** on Sat Oct 29, 2011 9:24 am

Lee Young wrote:In effecting the transfer from A, B and C to the limited company

No. Based on what you have said there would be a transfer of beneficial interest in the property from an LLP (treated as if it were a partnership for SDLT purposes) to a company.

Assuming that the company would be connected with some or all of the members of the LLP then the special partnership rules in Schedule 15 are in point, in particular there would be a transfer from a partnership to a person (the company) connected with a partner.