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HMRC internal manual

Partnership Manual

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HM Revenue & Customs
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Indirect, capital and transfer taxes and other tax obligations: VAT and partnerships: Stamp Duty Land Tax (SDLT): SDLT avoidance

HMRC is aware of partnerships being used for SDLT avoidance. The schemes seen have involved collusion between the vendor and purchaser by setting up a partnership in which they are both partners. The transfer of the property into the partnership invoked the special Partnership rules in Schedule 15 FA 2003 which uses a formula, known as the Sum of the Lower Proportions (SLP), to arrive at the chargeable consideration. The schemes all involved manipulation of the SLP to reduce the chargeable consideration (see SDLTM33500 onwards for guidance on SLP).

A statutory fix (FA03/S75C(8) was enacted to bring such arrangements within FA03/S75A from 24 March 2010. Section 75A is an anti-avoidance provision which counters various schemes intended to reduce SDLT liability. You should be alert to the possibility of new schemes being used to avoid SDLT.