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Mr Chancellor of the Exchequer
200
Page 577, line 30 [Schedule 39], at end insert—
| 17A | (1) | The sum of the lower proportions in relation to a transaction to which paragraph 16 applies is determined as follows:— |
| | Identify the relevant owner or owners. |
| | A person is a relevant owner if— |
(a) immediately after the transaction, he is entitled to a proportion of the chargeable interest, and
(b) immediately before the transaction, he was a partner or connected with a partner.
| | For each relevant owner, identify the corresponding partner or partners. |
| | A person is a corresponding partner in relation to a relevant owner if, immediately before the transaction— |
(a) he was a partner, and
(b) he was the relevant owner or was connected with the relevant owner.
| | For each relevant owner, find the proportion of the chargeable interest to which he is entitled immediately after the transaction. |
| | Apportion that proportion between any one or more of the relevant owner's corresponding partners. |
| | Find the lower proportion for each person who is a corresponding partner in relation to one or more relevant owners. |
(a) the proportion of the chargeable interest attributable to the partner, or
(b) if lower, the partnership share attributable to the partner.
| | The proportion of the chargeable interest attributable to the partner is— |
(a) if he is a corresponding partner in relation to only one relevant owner, the proportion (if any) of the chargeable interest apportioned to him (at Step Three) in respect of that owner;
(b) if he is a corresponding partner in relation to more than one relevant owner, the sum of the proportions (if any) of the chargeable interest apportioned to him (at Step Three) in respect of each of those owners.
| | Paragraph 17B provides for determining the partnership share attributable to the partner. |
| | Add together the lower proportions of each person who is a corresponding partner in relation to one or more relevant owners. |
| | The result is the sum of the lower proportions. |
| (2) | For the purposes of this paragraph persons who are entitled to a chargeable interest as beneficial joint tenants (or, in Scotland, as joint owners) shall be taken to be entitled to the chargeable interest as beneficial tenants in common (or, in Scotland, as owners in common) in equal shares. |
| 17B | (1) | This paragraph provides for determining the partnership share attributable to a partner for the purposes of paragraph 17A(1) (see Step Four). |
| (2) | Paragraph 17C applies for determining the partnership share attributable to a partner where— |
(a) the effective date of the transfer of the relevant chargeable interest to the partnership was before 20th October 2003, or
(b) the effective date of the transfer of the relevant chargeable interest to the partnership was on or after that date and—
| (i) | the instrument by which the transfer was effected has been duly stamped with ad valorem stamp duty, or |
| (ii) | any tax payable in respect of the transfer has been duly paid under this Part. |
| (3) | Where the effective date of the transfer of the relevant chargeable interest to the partnership was on or after 20th October 2003 but neither of the conditions in sub-paragraphs (i) and (ii) of sub-paragraph (2)(b) is met, the partnership share attributable to the partner is zero. |
| (4) | The relevant chargeable interest is— |
(a) the chargeable interest which ceases to be partnership property as a result of the transaction to which paragraph 16 applies, or
(b) where the transaction to which paragraph 16 applies is the grant or creation of a chargeable interest, the chargeable interest out of which that interest is granted or created.
| 17C | (1) | Where this paragraph applies, the partnership share attributable to the partner is determined as follows:— |
| | Find the partner's actual partnership share on the relevant date. |
| | In a case falling within paragraph 17B(2)(a), the relevant date— |
(a) if the partner was a partner on 19th October 2003, is that date;
(b) if the partner became a partner after that date, is the date on which he became a partner.
| | In a case falling within paragraph 17B(2)(b), the relevant date— |
(a) if the partner was a partner on the effective date of the transfer of the relevant chargeable interest to the partnership, is that date;
(b) if the partner became a partner after that date, is the date on which he became a partner.
| | Add to that partnership share any increases in the partner's partnership share which— |
(a) occur in the period starting on the day after the relevant date and ending immediately before the transaction to which paragraph 16 applies, and
(b) count for this purpose.
| | The result is the increased partnership share. |
| | An increase counts for the purpose of paragraph (b) only if— |
(i) where the transfer which resulted in the increase took place on or before the date on which the Finance Act 2004 was passed, the instrument by which the transfer was effected has been duly stamped with ad valorem stamp duty under the enactments relating to stamp duty;
(b) where the transfer which resulted in the increase took place after that date, any tax payable in respect of the transfer has been duly paid under this Part.
| | Deduct from the increased partnership share any decreases in the partner's partnership share which occur in the period starting on the day after the relevant date and ending immediately before the transaction to which paragraph 16 applies. |
| | The result is the partnership share attributable to the partner. |
| (2) | If the effect of applying Step Three would be to reduce the partnership share attributable to the partner below zero, the partnership share attributable to the partner is zero. |
| (3) | In a case falling within paragraph 17B(2)(a), if the partner ceased to be a partner before 19th October 2003, the partnership share attributable to the partner is zero. |
| (4) | In a case falling within paragraph 17B(2)(b), if the partner ceased to be a partner before the effective date of the transfer of the relevant chargeable interest to the partnership, the partnership share attributable to the partner is zero. |
| (5) | Paragraph 17B(4) (relevant chargeable interest) applies for the purposes of this paragraph. |
| 17D | (1) | This paragraph applies where— |
(a) there is a transfer of a chargeable interest from a partnership to a partnership, and
(b) the transfer is both—
| (i) | a transaction to which paragraph 10 applies, and |
| (ii) | a transaction to which paragraph 16 applies. |
| (2) | Where none of the chargeable consideration for the transaction is rent— |
(a) paragraphs 10(2) to (2C) and 16(3) to (3C) do not apply;
(b) the chargeable consideration for the transaction shall be taken to be what it would have been if paragraph 10(2) to (2C) had applied or, if greater, what it would have been if paragraph 16(3) to (3C) had applied.
| (3) | Where the whole or part of the chargeable consideration for the transaction is rent— |
(a) paragraphs 11 and 17 do not apply;
(b) the chargeable consideration for the transaction shall be taken to be what it would have been if paragraph 11 had applied or, if greater, what it would have been if paragraph 17 had applied.
| 17E | (1) | This paragraph applies where— |
(a) there is a transaction to which paragraph 16 applies;
(b) immediately before the transaction all the partners are bodies corporate;
(c) the sum of the lower proportions is 75 or more.
| (2) | Paragraphs 16, 17 and 17D have effect with these modifications. |
| (3) | In paragraph 16, for sub-paragraphs (3) to (3C) substitute— |
"(3) The chargeable consideration for the transaction shall be taken to be equal to the market value of the interest transferred.".
| (4) | In paragraph 16(4), for "sub-paragraphs (3) to (3C)" substitute "sub-paragraph (3)". |
| (5) | In paragraph 17, omit sub-paragraphs (3) and (7) to (9). |
| (6) | In paragraph 17, for sub-paragraph (4) substitute— |
"(4) If there is chargeable consideration other than rent, that chargeable consideration shall be taken to be equal to the market value of the interest transferred.".
| (7) | In paragraph 17, for sub-paragraph (5)(b) substitute— |
"(b) that chargeable consideration shall be taken to be equal to the market value of the interest transferred.".
(a) for "paragraphs 10(2) to (2C) and 16(3) to (3C)" substitute "paragraphs 10(2) and 16(3)";
(b) for "paragraph 10(2) to (2C)" substitute "paragraph 10(2)";
(c) for "paragraph 16(3) to (3C)" substitute "paragraph 16(3)".
| (9) | Paragraph 17A provides for determining the sum of the lower proportions.'. |
Mr Chancellor of the Exchequer
201
Page 577, line 31 [Schedule 39], leave out from beginning to end of line 21 on page 579.
Mr Chancellor of the Exchequer
202
Page 579, line 26 [Schedule 39], after 'But' insert '(subject to paragraphs 20A to 20C)'.
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