- This topic has 2 replies, 2 voices, and was last updated 30th September 2019 at 10:15 am by James Anderson.
19th September 2019 at 7:21 am #5075James AndersonGuest
Paragraph 20 of Sch 15 FA2003 deals with SLP. SDLTM33750 also covers this.
In the manual for step 3 it states that ‘there is no set method of performing this apportionment and it can be carried out to give the most beneficial result.’ I always assumed that this apportionment was based on the corresponding partner’s profit share, or can it be otherwise.
For the purpose of para 18 of Sch 15 if you had a partnership where the trading profits were in different proportions to the proportions of property capital on the balance sheet (where property has been introduced for the purpose of maximising business property relief for IHT purposes for instance – property capital reflects the previous beneficial share) which proportion would you apply – trading profit or proportion of property capital – if the property was transferred out of the partnership to the partner or someone connected.
I have recently been told of a case where a partner had a 30% profit split but 100% interest in property capital. This property was then transferred out of the partnership to a company which was controlled by the partner, as the relevant owner under step 1 – I’m told that the sum of the lower proportions was 100 so there was no SDLT to pay. This can’t have been based on the profit share but the accountant can’t tell me why the SLP was 100.
Can you apply other than the share of trading profits. I have also had a case where the trading profit for the partnership was higher than the share in the property capital 70% as opposed to 50% and the 70% applied.
James23rd September 2019 at 2:45 pm #5116Patrick CannonSenior Moderator
James, you are correct to be sceptical. The partnership share for these purposes is the share of trading profit not capital: see https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33400 The reason given to me by HMRC many years ago was that they thought that the share of trading profit was less open to manipulation than the share of capital.30th September 2019 at 10:15 am #5167James AndersonGuest
Many thanks for the reply Patrick.