What is a Type A partnership transfer for SDLT under para 14 of sch 15, FA 2003?

Home Forums Patrick Cannon What is a Type A partnership transfer for SDLT under para 14 of sch 15, FA 2003?

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  • #719 Reply
    confused…
    Guest

    We have an LLP property investment partnership with 3 members. There will be a change of members with 2 leaving and 2 new ones joining. One of the new members will be taking on responsibility for the debt. No money is actually changing hands or being withdrawn from the LLP.

    Under para 14 of sch 15, this will be a type A transfer only if “consideration in money or money’s worth is given”. Para 8 of sch 4 deems the assumption of debt to be chargeable consideration. However, going back to sch 15, if it is a type A transfer the chargeable consideration would the % of market value acquired by the new member.

    Do the sch 4 provisions mean that “consideration is given” so that we are a type A transfer? If no consideration is given, no SDLT is due as the property was acquired from an unconnected third party and won?t be relevant partnership property if it’s a type B transfer.

    #720 Reply
    Patrick
    Guest

    The assumption of debt will be consideration and so I’m afraid that you have a Type A transfer. It’s interesting that in most if not all admissions of new partners they will automatically assume liability for the debts whether or not there is a formal assumption

    #721 Reply
    Nick Beecham
    Guest

    Patrick

    I think there is some ambiguity here. If the facts are that one of the new members is directly taking on liability for debt, then I agree that this amounts to actual consideration and therefore a Type A transfer. However, if the facts are that the LLP’s indebtedness to a 3rd party remains unchanged and the new member simply takes over a share in that LLP (and so, indirectly, a share of the indebtedness) I would not see that as the provision of actual consideration (particularly in the light of Swayne v CIR CA, [1900] 1 QB 172) and it is actual consideration not chargeable consideration which triggers Para 14(3A)(b) Sch 15.

    #722 Reply
    Patrick
    Guest

    Nick, thanks and I agree with your analysis but I would be nervous about HMRC going along with it. I guess a lot would depend upon the wording of the admission to partnership/transfer document and it might be that a little finessing would assist here.
    On a separate matter you may be interested that I have already used the UT decision in Portland Gas Storage to generate an appeal in what was otherwise an out of time claim. Well done to you and Michael Thomas!

    #723 Reply
    Nick Beecham
    Guest

    Many thanks Patrick

    By the way, in Portland Gas Storage, HMRC have applied for permission to appeal to the Court of Appeal.

    #724 Reply
    Patrick
    Guest

    Thanks and I imagine that they are keen to close this down asap!

    #725 Reply
    Nick Beecham
    Guest

    Update: The UT has refused HMRC permission to appeal. HMRC has 28 days to seek permission from the Court of Appeal.

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