Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 17 paragraph 17

Anti-avoidance: withdrawal of partnership interest after land transfer

Paragraph 17 of Schedule 17 is an anti-avoidance provision that applies where, following a transfer of land into a partnership, the person who transferred that land then reduces or gives up their partnership interest under pre-arranged plans, and that withdrawal of interest would not otherwise be a chargeable transaction.

• Where land has been transferred into a partnership and the transferor subsequently reduces or exits their partnership interest under pre-existing arrangements, the withdrawal of the partnership interest is treated as a chargeable land transaction.
• The chargeable consideration is based on the market value of the land at the date of the partnership transfer, proportionate to the share of partnership interest given up or reduced.
• The partnership transfer and the original land transfer are treated as linked transactions, which means they are aggregated for the purpose of determining the applicable LBTT rate bands.
• The partners who remain after the transfer, together with any person becoming a partner as a result of or in connection with the transfer, are jointly and severally responsible for meeting the LBTT obligations arising from the deemed transaction.

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