| Home > Stamp Duties > Stump Duties > TRANSFERS OF LAND TO AND FROM A PARTNERSHIP – SIMPLIFICATION |
TRANSFERS OF LAND TO AND FROM A PARTNERSHIP – SIMPLIFICATION |
 |
 |
|
Capital Tax Review by Matthew Hutton MA, CTA (fellow), AIIT, TEP Matthew Hutton MA, CTA (fellow), AIIT, TEP author of Capital Tax Review, reports on a welcome change in the calculation of Stamp Duty Land Tax on partnership interests involving property.ContextThe beneficial changes to the SDLT regime announced by the Chancellor in his Budget on 22 March 2006 was summarised at CTR Issue No.14, Spring 2006, Item 17 (see below for CTR ordering information). This spells out the changes in a bit more detail.Transfer of Chargeable Interest to a PartnershipFor transfers with an effective date of on or after the date of Royal Assent (ie 19 July 2006), a simplified formula is introduced, based solely on market value, as follows: MV x (100 - SLP)%.There is no amendment to the ascertainment of the ‘sum of the lower proportions’ in para 12 of FA 2003 Sch 15. Where the chargeable consideration includes rent, para 3 of Sch 24 introduces a simplified formula for calculating the SDLT charge on the grant of a lease to a partnership by a partner or a person connected to a partner. The calculation of the charge on the net present value of any rent payable under such a lease is also simplified. Transfer of chargeable interest to a wholly corporate partnershipConsequential changes to para 13 of FA 2003 Sch 15 are made by para 4, consequential on the changes noted above.Post-transaction consideration: F(No 2)A 2005 measureAn amendment to FA 2003 Sch 15 para 17A is made by para 10 of FA 2006, Sch 24, to remove the potential double charge where there is a para 14 SDLT charge on general principles on the transfer of a partnership interest, but there is also a para 17A charge because of a withdrawal of funds from the partnership by the transferor partner within three years of the transfer of a chargeable interest in the partnership. The double charge is removed by reducing any para 17A charge by the para 14 charge.Transfer of a Partnership InterestThe Budget Announcement is found in para 9 of Sch 24 of FA 2006. A new heading ‘Transfer for consideration of interest in property-investment partnership’ clarifies the thinking behind the change, that is, from Royal Assent (19 July 2006), to restrict the para 14 charge to cases where there is a transfer of an interest in a partnership for consideration to a ‘property-investment partnership’. This is defined by new para 14(8) of FA 2003 Sch 15 as ‘a partnership whose sole or main activity is investing or dealing in chargeable interests (whether or not that activity involves the carrying out of construction operations on the land in question)’ – the phrase ‘construction operations’ having the same meaning as in FA 2004 Part 3 Chapter 3.Transfer of Chargeable Interest from a PartnershipAn amendment corresponding to that noted above is made (again with effect from Royal Assent) to the para 18 charge on the transfer of land from a partnership, so as to restrict the formula to market value: MV x (100 – SLP)%.In the case where the partnership grants a lease to a partner or someone connected with a partner, para 6 (amending FA 2003 Sch 15 para 19) provides a similar measure to para 3 of F(No 2)B 2006 Sch 24, for a lease being granted to a partnership. And, by para 8 of FA 2006, Sch 24, changes to para 23 are made consequential on the changes to paras 10, 11, 18 and 19 of FA 2003 Sch 15. (FA 2006, Sch 24) CommentAll of these changes take effect from Royal Assent to F(No.2) B 2006 on 19 July 2006. Why on earth they could not have been incorporated into the original regime applying from July 2004, one is left only to wonder! Interestingly, however, the change in computation of the SDLT charge on land both entering and leaving a partnership by withdrawing the ‘actual consideration’ element of the formula, apparently reflects HMRC’s Stamp Taxes’ practice over quite a long time – a point not generally in the public domain and appreciated only by those ‘in the know’ – hardly a mark of ‘open Government’.Matthew Hutton MA, CTA (fellow), AIIT, TEP August 2006 More InformationThe above article has been taken from Matthew Hutton’s Capital Tax Review, a quarterly update for professional advisers of private clients. For more information, visit http://www.taxationweb.co.uk/books/capital_tax_review.php.About the AuthorMatthew Hutton is a non-practising solicitor (admitted 1979), who has specialised in tax for over 25 years. Having run his own consultancy (latterly through Matthew Hutton Ltd) until 30th September 2000, he now devotes his professional time to writing and lecturing. |
|
About The Author  Mark McLaughlin is TaxationWeb's Co-Founder, Director and Technical Editor. He is a Fellow of the Chartered Institute of Taxation and a member of the Association of Taxation Technicians and the Society of Trust and Estate Practitioners. He lectures on tax subjects, is co-author of Tottel's IHT Annual and Ray & McLaughlin's IHT Planning, and Editor of Tottel's Tax Planning and Annual series. Mark's work has also been published in Taxation, Tax Adviser, Tolley's Practical Tax, Tax Journal and Simon's Weekly Tax Intelligence. Since January 1998, Mark has been a consultant in his own tax practice, Mark McLaughlin Associates, which provides tax consultancy and support services to professional firms. He publishes a regular 'Tax Update' e-Newsletter for clients and other professional firms. To receive future copies, contact Mark via his website. |
|
Article Added Saturday, 11 November 2006 |
Information
Help
Resources
About
PROUDLY SUPPORTING
