Home Forums Patrick Cannon When is market value relevant in SDLT?

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    Alastair Johnston

    I have been advising clients on some deals recently which involve exchanges of land. It is not clear to me whether the market value rule in para 5 of sch 4 FA 2003 overrides the rules for overages or works, or the foul partnership rules. I am aware of the principle that specific rules take precedence over general ones, but it strikes me that, for example, the rules for acquisition by a partnership from a partner and the exchange rules are both aimed at specific situations, and neither is stated to overrride the other. I can find no guidance on this so your thoughts would be helpful.

    #249 Reply
    Patrick Cannon

    I take the view that the exchange rules override the other rules as to consideration when you have a major interest being exchanged because you are required to ignore any cash passing. This sugests that you would also ignore any other types of consideration such as cash overage for example. However it is possible to imagine a land exchange with an overage element consisting of further land if the planning permission or whatever it is, was forthcoming and here there might be an issue about bringing in the value of the additional land under section 51 or running a Marren v Ingles argument that it was a chose in action and not an interest in land and should be ignored.
    The acquisition of an interest in a partnership owning a major interest in land in exchange for a land transaction with an existing partner is treated as if the partnership interest was a major interest in land: para 16 Sch 15 FA 2003. This has the effect of imposing a SDLT charge on the market value on both the partnership interest (without limitation it seems to the value of the land) and the associated land transaction under the SDLT exchange rules in para 5 Sch 4 FA 2003. Each party is liable to SDLT on the market value of what he acquires. The relief for partitions in para 6 Sch 15 FA 2003 is specifically disapplied in this situation. You are correct in that the question of what happens if a new partner contributes land to the partnership and in return takes some land out raises some difficult issues!

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