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Where land transactions take place between members of a group, relief for stamp duty land tax (SDLT) is available (FA 2003, Sch 7).
A ‘company' for such purposes is defined in Sch 7 as a 'body corporate'.
HMRC have previously considered that a limited liability partnership (LLP) body corporate did not constitute a body corporate.
However, following legal advice, the department now accepts that, for the purposes of SDLT group relief, a body corporate does include an LLP.
An LLP can therefore be the parent in a group structure, but as it does not itself have issued ordinary share capital it cannot be the subsidiary of other companies.
This also means that any subsidiaries of the LLP cannot be grouped with the companies that are the corporate members of the partnership.
This revised view does not affect who can claim group relief, but does affect which entities are regarded as forming part of a group. An LLP cannot claim group relief itself because its chargeable interests in land are treated as held by or on behalf of the individual members (FA 2003, Sch 15 para 2), and this position is unchanged.
It also follows that if an LLP transfers land to a company that it owns, and that is within the LLP headed group, no group relief will be available as the land is deemed to be owned by the members of the partnership, and those members are not within the same group as the company owned by the LLP.
HMRC say they will not revisit the claim if SDLT group relief has been incorrectly claimed solely as a result of an LLP in the group structure being disregarded or looked through for the purposes of establishing group relationships.
With regard to group relief for stamp duty (FA 1930, s 42), HMRC now accept that an LLP, as a body corporate, can be the ultimate parent of a group for this purpose, although, as an LLP does not itself have issued ordinary share capital it cannot be the subsidiary of another company.
Transfers of stock and marketable securities may be made to the parent LLP from a subsidiary body corporate in the same group and qualify for group relief and vice versa.
Group relief cannot be claimed on the transfer of stock and marketable securities from a body corporate parent of an LLP to the LLP or to a body corporate subsidiary of the LLP.
HMRC confirm that as English limited and general partnerships do not have legal personalities separate from the persons who are the partners they must be 'looked through' when establishing bodies corporate that form a group for stamp duty land tax and stamp duty purposes.
As such companies that are partners of an English general or limited partnership can, depending upon the facts, be grouped with those companies that are below the partnership in the group structure.
Both Scottish limited and general partnerships have legal personalities separate from the persons who are the partners and cannot therefore be looked through when establishing bodies corporate that form a group.
HMRC are reviewing the group relief legislation for both SDLT and stamp duty to see how well it reflects the underlying policy aims on this changed view of LLPs.
