Some clarity concerning the anti-avoidance measures may be starting to emerge.
Existing opportunities arise because transactions involving partnerships are dealt with under schedule 15 FA 2003, which schedule provides a complete code. Mitigation is possible by ensuring that the appropriate degree of connection exists as between the vendor and one or more partners in the purchasing partnership, so that only a fraction of market value is charged on acquisition. The general anti-avoidance rule contained in sections 75A to C of that Act, which introduces the concept of “notional transaction”, includes a rule to the effect that schedule 15 applies to the notional transaction so identified. The result is that the anti-avoidance rule does not produce a different result – at least in the context of partnership transactions.
It now appears that the proposed change relates to that rule. Instead of the partnership rules applying to the notional transaction identified under the anti-avoidance rule, the proposal appears to be that such rules will be specifically excluded.
If this is the case then this is likely to have unintended consequences, with quite straightforward partnership transactions becoming liable to SDLT or to increased SDLT, all with effect from today subject of course to “grandfathering” for existing arrangements.
Unfortunately, this is a difficult area – it is hard to balance the interests of taxpayers and the Treasury. The general anti-avoidance rule does not help given that it is very wide in its scope, with no motive test limiting its application.