LBTT7002 - General rules about the treatment of partnerships

LBTT guidance on general rules regarding the treatment of partnerships, including defining a partnership and rules on continuity of a partnership.

For the purposes of the LBTT(S)A 2013, a partnership means:

LBTT(S)A 2013 schedule 17 paragraph 2

Scottish partnerships have legal personality. For the purposes of LBTT however, a chargeable interest held by a partnership is treated as if it is held by or on behalf of the partners and any land transaction entered into for the purposes of a partnership is treated as if it is entered into by or on behalf of the partners and not by the partnership.

These provisions apply notwithstanding that the partnership is regarded as a legal person, or as a body corporate, under the law of the country or territory under which it is formed. In other words, partnerships are treated in the same way for the purposes of LBTT whether they are governed by the law of Scotland, of England and Wales, or of another country or territory.

LBTT(S)A 2013 schedule 17 paragraph 3

For simple partnership transactions see LBTT7004 (ordinary partnership transactions).

Acquiring an interest in a partnership that holds chargeable interests as a partner does not in itself constitute a land transaction unless any of the following provisions within the LBTT(S)A 2013 apply:

LBTT(S)A 2013 schedule 17 paragraph 4

Continuity of partnership

For the purposes of LBTT, a partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member after the change.

This does not change the requirement that for a partnership to exist there must be more than one partner. If, for instance, partners B and C leave a three person partnership consisting of A, B and C, the partnership ceases to exist. If, at a later date, D joins A in partnership a new partnership has been created.

In the same way, there could be a continuing partnership if D joined the ABC partnership under the same agreement and at the same time as B and C left. In this case there is always more than one partner and the requirement for there to be a member who was a member before the change and remains a member after the change is satisfied.

LBTT(S)A 2013 schedule 17 paragraph 5

Partnership not to be regarded as a unit trust scheme

For the purpose of LBTT, a partnership is not to be treated as

  • a unit trust scheme – see LBTT5005; or
  • an open-ended investment company – see LBTT3047.

LBTT(S)A 2013 schedule 17 paragraph 6

Ref ID: 
LBTT7002
Archive Date: 
9 March 2015
Last updated: 
27 October 2015
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