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HMRC internal manual

Stamp Duty Land Tax Manual

Special provisions relating to partnerships: Transfer of interest in a property investment partnership

Election by property investment partnership to dis-apply Para10 - Para12

In certain circumstances, where property is transferred to a partnership (by a partner, for example) the chargeable consideration is calculated according to the special rules set out in Para10.

Where Para10 applies to a transfer of a chargeable interest to a partnership, partnerships that fall within the definition of a property investment partnership (Para14(8)) can elect for Para10 not to apply.

If an election is made the transaction is not treated as being within Part3 (transactions to which special provisions apply) instead the chargeable consideration is the market value of the chargeable interest transferred.

Where an election is made in respect of a transaction Para18 (if relevant) is also dis-applied. Para18 would be relevant only if a chargeable interest was passing from a partnership to a partnership.

An election under this paragraph must be included in the land transaction return made in respect of the transaction or in an amendment of that return. Such an election is irrevocable and a land transaction return may not be amended so as to withdraw the election.

The election should be made by letter addressed to the Technical & Guidance Team in Birmingham

Where an election under this paragraph in respect of a transaction (the “main transaction”) is made in an amendment of a land transaction return—

  1. the election has effect as if it had been made on the date on which the land transaction return was made, and
  2. any land transaction return in respect of an affected transaction may be amended (within the period allowed for amendment of that return) to take account of that election.

“Affected transaction” in relation to the main transaction, means a transaction to which Para14 applied, with an effective date on or after the effective date of the main transaction.

It is only possible to make an election in relation to the transfer of a chargeable interest to a partnership that is a property investment partnership within Para14 (8). The effects of making such an election can be divided into ‘immediate’ and ‘future’:

‘Immediate’ effects:

  1. to dis-apply Para10 (and Para18 if a transfer between partnerships)

to substitute chargeable consideration equal to the market value of the chargeable interest transferred to the partnership.

‘Future’ effects:

  1. where there is a subsequent transfer of an interest in the property investment partnership that is a Type B transfer, the particular chargeable interest(s) that is (are) the subject of elections under this paragraph do not count as relevant partnership property.
  2. where there is a subsequent transfer of an interest in the property investment partnership that is a Type A transfer, any election under Para12A in respect of particular chargeable interests will not preclude those chargeable interests from being relevant partnership property.