SCHEDULE 7PARTNERSHIPS

PART 4TRANSACTIONS INVOLVING TRANSFERS TO A PARTNERSHIP

Transfer of partnership interest pursuant to tax avoidance arrangements

I1C118

1

This paragraph applies where—

a

there is a transfer of a chargeable interest to a partnership (““the land transfer””);

b

the land transfer falls within paragraph 13(1);

c

there is subsequently a transfer of an interest in the partnership (““the partnership transfer””);

d

the partnership transfer is made—

i

if the land transfer falls within paragraph 13(1)(a) or (b), by the person who makes the land transfer;

ii

if the land transfer falls within paragraph 13(1)(c), by the partner concerned;

e

the partnership transfer is made pursuant to arrangements which are, or form part of, tax avoidance arrangements that were in place at the time of the land transfer;

f

the partnership transfer is not (apart from this paragraph) a chargeable transaction.

2

For the purposes of this Act, the partnership transfer—

a

is taken to be a land transaction, and

b

is a chargeable transaction.

3

The partners are taken to be the buyers in the transaction.

4

The chargeable consideration for the transaction is taken to be equal to a proportion of the market value, as at the date of the transaction, of the interest transferred by the land transfer.

5

That proportion is—

a

if the person making the partnership transfer is not a partner immediately after the partnership transfer, that person's partnership share immediately before that transfer;

b

if the person is a partner immediately after the partnership transfer, the difference between the person's partnership share before and after that transfer.

6

The partnership transfer and the land transfer are taken to be linked transactions.

7

Paragraphs 9 to 11 (responsibility of partners) have effect in relation to the partnership transfer, but the responsible partners are—

a

those who were partners immediately before the transfer and who remain partners after the transfer, and

b

any person becoming a partner as a result of, or in connection with, the transfer.

8

In this paragraph, “"tax avoidance arrangements”” has the meaning given by section 31.