Stamp Duty when transferring the ‘whole business’ of a Partnership into a Limited Company

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Stamp Duty Land Tax “SDLT” is not payable when a family-owned business partnership transfers its ‘whole business’ to a company at the point of incorporation, nor is a return needed. This also applies to non-family partnerships where the partners retain joint control of their new company. The legislation is FA2003/sch15 as amended by FA2004/Sch41

In Scotland, the applicable legislation is Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 17.

The Partnership Act 1890 Act describes a partnership as ….

‘the relation which subsists between persons carrying on a business in common with a view of profit.”

Please see

Further tests as to whether you are running a Partnership are:-

  1. Is there a business? A Partnership cannot exist based purely on Joint Ownership. A business must also exist.
  2. Do the owners of the business share income, expenses, profits, losses and risks?
  3. Are the co-owners ‘co-adventurers in business’?

According to case law, the factors that point to the activities involved being broadly what you would expect in a business are:

  • Is there a “serious undertaking earnestly pursued” or a “serious occupation”
  • Is there an occupation or function actively pursued with reasonable or recognisable continuity?
  • Is there a certain amount of substance in terms of turnover?
  • Are the activities conducted in a regular manner and on sound and recognised business principles?
  • Are they of a kind which, subject to differences of detail, are commonly made by those who seek to profit by them

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