HMRC SDLT: SDLTM33870 – Transfer of a chargeable interest from a partnership consisting wholly of bodies corporate – Example 3

Principles and Concepts of SDLTM33870

This section of the HMRC internal manual provides guidance on the transfer of a chargeable interest from a partnership consisting wholly of bodies corporate. It includes an example to illustrate the process.

• Explains the tax implications for partnerships made up of corporate bodies.
• Provides a detailed example to clarify the transfer process.
• Outlines the legal framework governing such transfers.
• Offers practical insights for applying the rules effectively.

SDLTM33870 – Transfer of a Chargeable Interest from a Partnership Consisting Wholly of Bodies Corporate – Example 3

This example is similar to example 1 found in SDLTM33850, but in this case, the property is transferred to Company X. Below, we discuss how to evaluate the transaction step by step.

Step One: Identify the Relevant Owners

The first step is to identify who the relevant owners are in the context of this transaction.

• Company X is a relevant owner. This is because, right after the transfer, Company X has a claim to a part of the chargeable interest. Before the transaction, Company X was linked to one of the partners in the partnership.

Step Two: Find the Corresponding Partners

Next, we must determine if there are any corresponding partners for Company X.

• In this case, there are no corresponding partners. Company X is not itself a partner in the partnership. Additionally, Company A and Company B, who are partners, are corporate bodies, not individuals. Therefore, the requirement in Step Two (b) is not satisfied.

Calculate the SLP

Since there are no corresponding partners, the SLP (Special Partnership Relief) equals zero. This means that the calculation moves forward without any adjustments related to partner interactions.

Chargeable Consideration Calculation

Since the relevant chargeable consideration for this transaction is based on the proportion of ownership, we need to check whether the lower proportion is less than 75 percent.

• In this instance, the lower proportion is indeed less than 75 percent. Therefore, Paragraph 24 does not apply.

This leads us to the chargeable consideration being 100% of the market value of the property involved. In this example, the market value is £5 million.

Group Relief Considerations

When dealing with situations like this, the availability of group relief can depend on the status of the partnership and specific rules outlined in paragraph 27 of the guidance. For more information on this, see SDLTM34360.

This example illustrates how the rules apply to a transfer involving corporate partners rather than individuals, affecting the considerations for both the transaction and any potential reliefs. Understanding these steps and the underlying concepts can help navigate the complexities of stamp duty land tax when dealing with corporate entities. It is important to assess both the chain of ownership and any qualifying factors in partnerships to determine tax liabilities appropriately.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM33870 – Transfer of a chargeable interest from a partnership consisting wholly of bodies corporate – Example 3

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