Is SDLT payable on the transfer of capital interest in a partnership?

[Patrick]

You’re correct in thinking that a retrospective election under para 12A would withdraw the benefit of para 10 on the original transfer to the LLP and avoid the para 14 issue on the transfers of the company’s interest in the LLP. However I don’t quite follow the reasoning in your second last para about the original interest transferred to the LLP being small. If the company sub-sold ?1m worth of property to the LLP then was not the interest transferred worth ?1m on which SDLT would be due in the absence of para 10?

[Jupiter Button]

In the absence of para 10, the normal partnership rules would apply, and the transfer by the company to the partners of the LLP only involves 6% of the chargeable interest being transferred to persons other than the company.

[Patrick]

But wouldn’t para12A(2)(b) create a mv charge?

[Jupiter Button]

Is it possible to argue that the chargeable interest transferred is just 6% of the entire interest (on the basis that under the look through treatment, as per Part 2, 94% of the interest is retained by the company)?

Is this where my idea starts breaking down?

[Author]

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