SDLT

[ChetanP]

A limited company, ABC Ltd has 2 directors and they are also the 2 shareholders. These 2 persons are brothers.

These 2 brothers also have a B2L property that they own equally.
There is no partnership agreement on this ownership and they do not file a partnership tax return
The rental profits are shown on their TR form.

They want to transfer this B2L property into ABC Ltd.
Capital gains is not a problem as there is none.
Question – is SDLT payable on such a transfer?

NB:
• The owners remain the same before and after such a transfer ie there is no one else in this transaction.
• There is no mortgage on this B2L property

I would appreciate any opinions on such a transfer.

[jerome.lane]

The quick answer is that SDLT appears to be due. It really is down to the substance of the activity in managing the property as to whether a business exists and SDLT reliefs could apply for the transfer to a company. Clearance can be sought from HMRC although one property partnerships are less likely to be successful. If ABC LTD is trading and VAT registered, partial exemption may become a nuisance and the shareholders should consider whether they would be losing business asset disposal relief in the future.

[ChetanP]

Hi Jereme,
Thank you for your reply.
I don't think it will qualify as a "business".
Clearance - I thought that this was not available. I would be grateful if you can confirm this, please.
VAT - The company is not VAT registered and so PE is not an issue.

[jerome.lane]

Clearance is possible - I’ve done this for clients over 200 times now over the years

[ChetanP]

Thank you. Really appreciated.