Finance Bill Tracking Service 2010 | Budget 2010

BN26 STAMP DUTY LAND TAX PARTNERSHIPS

Who is likely to be affected?

1. The measure will affect those who seek to exploit the special stamp duty land tax (SDLT) rules for partnerships.

General description of the measure

2. Some companies and individuals currently exploit the SDLT partnerships rules to reduce artificially the SDLT payable on some land transactions. Legislation will be introduced in Finance Bill 2010 to ensure that the existing SDLT anti-avoidance rules apply to prevent this.

Operative date

3. The measure will apply where a "notional land transaction" created by the anti-avoidance rules (see below) has an effective date on or after 24 March 2010, subject to transitional rules.

Current law and proposed revisions

4. The SDLT partnerships rules apply, broadly, to transactions between a partnership and one of the partners. The rules calculate the chargeable consideration of a land transaction according to the degree of connection, by way of the partnership, between the vendor and purchaser. These rules are being exploited for some land transactions by contriving a partnership relationship between the vendor and the purchaser such that the chargeable consideration, and thus the SDLT due, is greatly reduced.

5. There are existing SDLT anti-avoidance rules which, where they apply, impose a charge on a "notional land transaction". The SDLT partnerships rules currently apply to a "notional land transaction".

6. The legislation in Finance Bill 2010 will disapply the partnerships rules from a "notional land transaction". Transactions which fall within the anti-avoidance rules will not benefit from the special partnerships rules for calculating chargeable consideration.

7. The effective date of a notional land transaction is, broadly, the date that the last scheme transaction occurs; "scheme transactions" being the transactions that effectively make up the notional land transaction. The transitional rules provide that a notional land transaction where any of the scheme transactions is entered into before 24 March 2010 will usually come under the old rules.

Further advice

8. If you have any questions about this change, please contact Jeremy Schryber on 020 7147 2788 (email: jeremy.schryber@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk