A partnership holds an investment property and the partnership is incorporating (with partners as shareholders in the same proportions). I had understood the SDLT rules for partnerships to mean that no SDLT would be payable. The solicitor has raised a concern that the rules on a transfer into a company take precendence and SDLT is charged on market value, but has no direct experience of HMRC winning this argument. Which view is a) correct and b) reflects recent HMRC practice?
HMRC accept that the special partnership rules trump the section 53 market value rule. S53(4) makes the mv rule subject to any other “exemption or relief” which is apt to cover this siutation. See 3.4 of my Tolley Stamp Taxes book for more on this.
You ask whether SDLT is payable. As PC says, this is determined under Para 18 Sch 15 FA 2003 and no SDLT should be due if the partners are connected (e.g. husband & wife). If they are unconnected then SDLT may be due, but there are ways around this.
For any residential property going into a company you need to consider the new SDLT and other tax charges announced in the 2012 Budget.