For the purposes of the LBTT(S)A 2013, a partnership means:
- a partnership within the Partnership Act 1890;
- a limited partnership registered under the Limited Partnerships Act 1907;
- a limited liability partnership formed under the Limited Liability Partnerships Act 2000 or the Limited Liability Partnerships Act (Northern Ireland) 2002 (all UK limited liability partnerships are now governed by the 2000 Act); or
- a firm or entity that is similar to any of the above.
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.
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:
- Part 4 of schedule 17 (transfer of chargeable interest to a partnership – see LBTT7005);
- Paragraph 17 of schedule 17 (transfer of a partnership interest pursuant to earlier arrangements – see LBTT7006); and
- Paragraph 32 of schedule 17 (transfer of interest in a property investment partnership – see LBTT7011).
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.
Partnership not to be regarded as a unit trust scheme
For the purpose of LBTT, a partnership is not to be treated as