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bigduckontax
bigduckontax, Accountant
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Two business partners are dividing a number of properties between

Customer Question

Two business partners are dividing a number of properties between them present value £3m, debt value £2m. Is the SDLT under the special rules which I know will be 1% be based on the " consideration " of £3m or the debt of £2m.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

SDLT is based on the consideration. The following rule [Gov UK advice] may apply:

'If 6 or more residential properties form part of a single transaction If 6 or more properties form part of a single transaction the rules, rates and thresholds for non-residential properties apply. The amounts paid for all the properties in the transaction must be added together in order to establish the rate of tax payable.'

The rate would be 7% on a GBP 3m transaction.

I do hope I have helped you with this question. SDLT is usually handled by the solicitor responsible for the conveyancing. Historically solicitors' monopoly on conveyancing was granted in return for their collecting Stamp Duty on the Government's behalf.

Customer: replied 2 years ago.
It appears that this is not an area that you are familiar with. Firstly where there are a number of properties that are to be split up ,rules apply which allow the rate of tax to be charged at 1% ,this is definitely the case in this situation which I have advised you off. BThe question is whether the consideration is based on the value of the properties or the associated debt . In this case it will be £30000 or £20000. If you are not sure on this can you pass the question on please
Expert:  bigduckontax replied 2 years ago.
If these are are a series of conveyances then the normal rates would be applied. 1% would be applicable to a consideration in the 125K - 250K range [3% 250K - 500K]. However, HMRC might well take the view that the 6 property rule I told you of might well apply if the transactions are considered linked.
Customer: replied 2 years ago.
I am sorry to be blunt but your answer is incorrect. Where there are a number of properties jointly owned and these properties are bring equally split with no cash changing hands there is firstly no capital gains tax levied and the rate of tax applying in this case is 1%. The specific question to you ( because there is division of opinion between two accountants ) is as before is the figure the tax is to be levied on £3m or £2m. It is ok to say that this is not your area of expertise and pass to another or end the thread. Thanks
Expert:  bigduckontax replied 2 years ago.

I suggest that on the subject of Capital Gains Tax (CGT) that you are sadly in error. Any disposal attracts CGT, even giving property away.

SDLT is charged on the consideration. I have noted what you have told me about the manner in which the sale is being conducted. I have merely warned you that HMRC might consider that the transactions are linked and 7% as opposed to 1% is the rate applicable. Please don't shoot the messenger.

If other experts feel that additional information is appropriate Just Answer protocol permits over posting.

Customer: replied 2 years ago.
It is sad for me to say as a fellow professional but your understanding of CGT in this scenario matches your understanding of SDLT. Your advice is at best reckless and at worst stunningly dangerous. You are no doubt capable in certain areas but you are way out of your depth and would in the real world be sued for considerable sums and deemed negligent. What I have stated is100% correct. You should with respect be very careful when you are not familiar with subjects.
Expert:  bigduckontax replied 2 years ago.

Thank you for your opinion. You asked a specific question and received an appropriate response. SDLT is based in consideration.

Customer: replied 2 years ago.

respectively i can not see where you have answered the question . the question asked is the consideration that SDLT is based on .......

the value of the properties being taken by each party or...

the value of the debt taken by each party.?

Expert:  bigduckontax replied 2 years ago.
The debt is an internal matter. SDLT, as I have told you from the beginning, is charged on the consideration. It is the partnership as a whole which must bear the SDLT on the whole value of the transaction. The Land Registry will not accept a transfer which has not suffered the correct SDLT.
Customer: replied 2 years ago.

i believe that it was me who refered to consideration at the outset,...... you refered me to an extract refering to price paid (there is no price paid here ) and surely..... it is not the partnership that would suffer the SDLT how could it be when ownership is moving from the partnership to an indidual who is "purchasing /acquiring it " surely the purchaser pays SDLT and not a vendor.

there is an arguement to say that the debt is internal but it is not so in HMRC directives ...in fact they refer to the value of a property which is taken over with an attaching debt and state that what is being acquired is the value of the property plus the debt that is being dispossed of but then they go to say that it must be fair and therefore the debt itself is dropped. however the stamp office when contacted advised (by phone ..hence caution ) that it was the debt , however it appears that you are unable to answer the question . what is consideration for stamp duty purposes in this case?

Expert:  bigduckontax replied 2 years ago.
Exactly, the value plus the debt. Indeed it is the buyer who pays the SDLT, but it will still be based as stated in HMRC directives.
Customer: replied 2 years ago.

exactly ! sorry your replies are and contradictory and in error , you say its the partnershipwho pays ..i say it is the individual.

you say it is the value plus the debt , it is not ....the debt is excluded.

you say CGT is due on the spilt of properties ...it is not where it is a single split with no cash changing hands. you say the 6 property rule may apply but appear to misquote it by omitting to say that when the values of the properties are added together the total sum must be divided by 6 to arrive at the chargeable sum . if any of my points are clearly wrong please let me know that is what i am asking for .once again i come back to ...what is consideration...stamp duty is a difficult area which is why im asking

is

Expert:  bigduckontax replied 2 years ago.
There is little point in my continuing to engage with this question.
Customer: replied 2 years ago.

quite

Expert:  bigduckontax replied 2 years ago.

There is no pint in commenting on a poor rating.

Customer: replied 2 years ago.
Relist: Inaccurate answer.
the answers given were simply incorrect .the adviser is obviously capable in other areas but this has not been a good answer at all
Expert:  bigduckontax replied 2 years ago.
Post to clear my question list.
Customer: replied 2 years ago.

i dont understand what you mean . i take no pleasure in posting a poor rating but there were too many errors and to rely on the answers would have been embarassing when challenged. as i say you are capable no doubt in many other areas but can i suggest not well enough researched in this one before your reply.

Expert:  bigduckontax replied 2 years ago.
Every time you post a response it comes up on my question list as requiring action, so I make a small post to clear the list; That is all.
Customer: replied 2 years ago.

i see

Expert:  bigduckontax replied 2 years ago.
So here we go again.

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