SDLT and partnership dissolution

SDLT and partnership dissolution

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I appreciate this is a specialist area, and that I will almost certainly end up calling in the experts - but if anyone out there wants to add their thoughts ....

2 men in partnership since the 1960s. Partner A dies in 2006, leaving partner B holding the assets (all land and buildings) in trust for the former partners - himself and estate of deceased. Income/capital sharing has always been 75/25 in favour of B. It has been agreed (or is likely to be) that B will pay the estate of A sum of money (£600k) in settlement of the estate's claim to the interest in the assets of the former partnership, title of all the assets passing to B. MV is conservatively estimated at £5m.

The question (obviously) is - what SDLT will be chargeable on B? Reading Sch15 of FA03, it would appear that the SDLT will simply be 4% of £1.25m (£5m @ (100-75)%). It seems straightforward, but in view of the sums involved, and the way in which the legislation is drafted, I'd be grateful for confirmation (or otherwise).

There is a further potential wrinkle - there is an argument that the partnership was actually dissolved in 2002 by verbal agreement (this the subject of Court proceedings). If that were so, again my reading of Sch15 seems to indicate that SDLT would then be payable on the full amount, ie 4% of £5m - ouch. Again, would that be correct?
David Lochhead

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