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Is there SDLT on transfer of property?

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The existing structure is a mixed partnership; husband, wife and company (husband & wife directors and equal shareholders). The property is currently owned 49% husband, 49% wife, 2% company. The plan is to cease the partnership and transfer the trade (nursing home) and property to the corporate partner. There is CGT on the transfer but is there SDLT? If so, what about if the property is transferred to a new company which then continues the trade?

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By bernard michael
11th Jun 2020 10:20

Yes SDLT is payable. Beware it's payable on the market value not the consideration if that is lower

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By Justin Bryant
11th Jun 2020 10:49

SDLT should not be payable here. There are CGT issues as you say. See: https://www.tax.org.uk/media-centre/latest-news/mixed-partnerships-and-c...

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Replying to Justin Bryant:
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By bernard michael
11th Jun 2020 12:18

Justin Bryant wrote:

SDLT should not be payable here. There are CGT issues as you say. See: https://www.tax.org.uk/media-centre/latest-news/mixed-partnerships-and-c...

Is that the latest source as it was posted in 2016 ?? I prefer the HMRC manual

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Replying to bernard michael:
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By Coops
11th Jun 2020 12:32

Hi Bernard, if you have a look at the HMRC manual paragraph that I referred to, this confirms that the partnership SDLT rules override the normal market value rule

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Replying to Coops:
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By Tax Dragon
11th Jun 2020 12:50

Override, or supplement? My understanding (self-confessedly limited) was that any charge would be based on market value as Bernard says, but that only a percentage of that value comes within the charge. (True, in the present case, that percentage is zero - so it's as good as an override - but I hope you appreciate the point is valid beyond mere pedantry.)

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By Coops
11th Jun 2020 10:50

There are special rules for calculating the chargeable consideration on transfers of property from a partnership to a connected company. SDLTM34170 will give you a good starting point.

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By bernard michael
11th Jun 2020 10:59

This from HMRC
When property is transferred to a company, SDLT may be payable on its market value, not the consideration given. For example, if a property has a market value of £200,000 but the company only pays a consideration of £100,000, SDLT will still be payable on £200,000.

This applies in either of the following situations, the:

person who transfers the property is ‘connected’ with the company - the definition of a connected person covers relatives and people who’ve some involvement with the company
company pays for the property with shares in the company (partly or wholly) to the person making the transfer, where that person is connected to the company (but not necessarily the acquiring company)

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Replying to bernard michael:
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By Justin Bryant
11th Jun 2020 11:03

But I am an SDLT specialist and know what I'm talking about, whereas you aren't & don't. I suggest you refrain from commenting on areas you know little or nothing about in future.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
11th Jun 2020 12:00

Sound advice, Justin. If only you would follow it.

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Replying to Justin Bryant:
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By GSWB1954
11th Jun 2020 14:38

What's the definitive legislation relating to whether or not there is a SDLT charge as opposed to the value of the transfer and connected persons Justin?

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Replying to GSWB1954:
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By Justin Bryant
11th Jun 2020 15:27

You rely on the legislative interpretation rule that specific provisions override more general provisions (and HMRC accept that that's the case in this case).

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By The Dullard
11th Jun 2020 13:37

Both SDLT and CGT could probably be avoided in these circumstances, although it does involve the use of a thing known as "a plan". This mixed partnership, I don't suppose it's an LLP?

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Replying to The Dullard:
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By GSWB1954
11th Jun 2020 14:33

It's an ordinary partnership not a LLP.

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Replying to GSWB1954:
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By The Dullard
11th Jun 2020 16:00

And is the company owned by H&W?

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Replying to The Dullard:
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By Justin Bryant
11th Jun 2020 16:48

I expect so, as it says in the above question: "...husband, wife and company (husband & wife directors and equal shareholders)."

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