Para 21 of Sch 15 appears to result in an SDLT charge when property is transferred out of a partnership, where the property was earlier introduced to the partnership (but post October 2003) in circumstances where no SDLT was paid.
So if an individual transferred a property to an LLP of which he and his wife were members in say 2008 there would have been no SDLT, and therefore a later transfer of the property out of the partnership to persons connected with the members will result in an SDLT charge.
Doesn’t this seem to produce a result which is at odds with the general principle of Schedule 15?
Would it be worth considering creating, in situations similar to my example, a small SDLT charge on the introduction of the property by having an unconnected partner? Would this get around para 21? I am guessing this would be more appropriate where the future intention is to retain the property within the family.
This issue also arises in some very ordinary situations, for example:
Husband owns property entirely; Husband forms LLP with wife as equal partners and transfers property into LLP; No SDLT charge on transfer under para 10; Wife leaves LLP and her interest transfers to Husband; Husband charged to SDLT on half of market value of property under para 14; Husband then decides to hold the property in his own name and wind up the LLP; SDLT charge on market value of property under 18.
Overall SDLT is paid on 150% of market value of property!!