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HMRC internal manual

Stamp Duty Land Tax Manual

Special provisions relating to partnerships: Incorporation of limited liability partnership FA03/S65

FA03/S65 applies to a transaction by which a chargeable interest is transferred by a person (transferor) to a limited liability partnership in connection with its incorporation.

Such a transaction is exempt from charge if the following conditions set out in FA03/S65 are met

  1. The effective date of the transaction is not more than one year after the date of incorporation of the limited liability partnership.
  2. At the relevant time the transferor—



    1. is a partner in a partnership comprised of all the persons who are or are to be members of the limited liability partnership (and no-one else), or
    2. the interest transferred as nominee or bare trustee for one or more of the partners in such a partnership.
    3. the proportions of the interest transferred to which the persons mentioned in 2 above are entitled immediately after the transfer are the same as those to which they were entitled at the relevant time, or
    4. none of the differences in those proportions has arisen as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to any duty or tax.

Where the transferor acquired the interest after the incorporation of the limited liability partnership, “the relevant time” means immediately after he acquired it. In any other case, “the relevant time” means immediately before incorporation of the LLP.

Where the provisions of FA03/S65 and Para10 both apply to the transfer of a chargeable interest to a limited liability partnership, the provisions of Schedule 15 will not apply and the transaction will be exempt from charge by FA03/S65, as HMRC regard FA03/S65 as taking priority.

Limited liability partnership means limited liability partnership formed under the Limited Liability Partnerships Act 2000 or the Limited Liability Partnerships Act (Northern Ireland) 2002 (c 12 (NI)).