SDLT: partnerships and trusts

Article by Matthew Hutton, the author of the 2nd edition of Hutton & Anstey: Stamp Duty Land Tax . This article appeared in the September 2005 issue of Tax Adviser. For all the technical and practical problems presented by stamp duty land tax (SDLT), its application to partnerships has to be one of the most difficult areas currently facing professional advisers. The following supplement appeared in the November 2005 issue of Tax Adviser. Some qualification is needed to the point made at the end of the second column on p8 in terms of the definition of 'partnership property'. Although Stamp Taxes are currently holding to their view that the definition in para 34(1) would include property owned by a partner personally held outside the partnership, but made available to the partnership for its business, they have recently confirmed that the 'horror scenario' mentioned in the article would not in fact arise. The reason for this is that death breaks the connection for purposes of the definition of 'connected persons' in ICTA 1988 s839. Accordinly, the personal representatives of the deceased partner cannot be connected with the continuing partners and so the point - in those specific circumstances - falls away. While the debate with Stamp Taxes continutes, one suggestion for side-stepping the general problem could be the grant of an express lease by the property-owning partner to the partnership, subject of course to the usual compliance obligations for leases. A small amendment is also required to the Example on p6. The words 'and will after the marriage to his daughter be' should be deleted. While the Example itself holds good, given a transfer to the partnership before James is married to Alicia, a son-in-law is connected to his father-in-law under s839. Technical Department 020 7235 9381 November 2005 by Matthew Hutton