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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Application of exemptions and reliefs: Group Relief

There is a transfer of a chargeable interest from B Ltd to LLP

We are looking at a transfer to a partnership so the provisions of para 2 will apply so we need to establish any SDLT liability using para10, 12 and 27A - see SDLTM33550.

Step One

Identify the relevant owner or owners.

B Ltd is a relevant owner because, immediately before the transaction, it is entitled to a proportion of the chargeable interest and immediately after the transaction it was a partner.

Step Two

For each relevant owner, identify the corresponding partner or partners.

B Ltd is its own corresponding partner because, immediately after the transaction it was a partner and it was the relevant owner.

C Ltd is also a corresponding partner as immediately after the transaction it was a partner and it is connected to the relevant owner (para27A).

Step Three

B Ltd is entitled to 100% of the chargeable interest immediately after the transaction.

There are two corresponding partners so this proportion can be apportioned between B Ltd and C Ltd, this can be carried out to give the most beneficial result.

For this example we will apportion 50:50 as this will give the most benefit.

Step Four

The lower proportion for each person who is a corresponding partner is the proportion of the chargeable interest attributable to the partner, or if lower, the partnership share attributable to the partner.

As the proportion of the chargeable interest attributed to each partner at Step Three was 50 and the partnership share attributable to each partner is also 50 the lower proportion has to be 50 each

Step Five

We add the lower proportions together, 50 + 50.

As a result, the sum of the lower proportions in this instance is 100.

As a result of para27A (which allows C Ltd to be regarded as a corresponding partner) the SLP in this instance is 100 so the chargeable consideration is nil and there is no SDLT liability.

Utilising para 2(1) we would look through the partnership to the partners and this is effectively a transfer from B Ltd to B Ltd and C Ltd, i.e. B Ltd transfers 50% of its interest in the property to C Ltd.

As B Ltd and C Ltd are both 100% subsidiaries of A Ltd Sch 7 will apply (providing the requirements pf Sch7/para2are met) which will give relief against the charge identified under Sch15.

As both the Sch15 calculation and the application of Sch7 result in a nil charge the liable person may decide which provisions they wish to utilise.