Mr A owns a property, in which he carries on a profession. He now proposes to start an LLP, take on a partner and operate from the same building. If he transfers the building into the LLP, is there a way of claiming rollover relief on the gain, or otherwise deferring the CGT?
And is SDLT due? On the whole of the value at transfer?
Brian Clarke
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My suggestion is that you read
statement of practice SP/D12 and come back with any specific questions, though you may not have any after reading it.
Have I got it right?
1. Per SP D12, dealings in chargeable assets by the LLP are treated as dealings by the partners individually (fiscal transparency).
2. A person can't transfer an asset to himself, so for tax purposes there is no transaction when the property is transferred into the LLP.
3. In this particular case, the new partner will be salaried, so Mr A's share of the partnership will be 100%. It would become an even more interesting question if the new partner was getting equity; would there be a part disposal of the property in the hands of Mr A?
4. SP D12 doesn't mention Stamp Duty, but then it doesn't sound a problem if there is no transaction for tax purposes. Mind you, if the new partner had 10% of the equity and the property was transferred into the LLP, it sounds as if there would be a disposal for tax purposes of 10% of the property.
5. And what if the new partner gets equity later on?