Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 12 paragraph 4

Condition C: proportions of interest must remain the same or not change for tax avoidance purposes

Schedule 12, paragraph 4 sets out Condition C, which requires that when a chargeable interest is transferred to a limited liability partnership, the partners' proportions of that interest must either remain unchanged or any changes must not be motivated by tax avoidance.

• Condition C focuses on whether partners' shares of the chargeable interest change as a result of the transfer to the LLP.
• The proportions each partner holds immediately after the transfer must match the proportions they held at the relevant time (as defined in Condition B).
• If the proportions do differ, the relief is still available provided the changes did not arise as part of arrangements whose main purpose (or one of whose main purposes) is tax avoidance.
• This condition acts as an anti-avoidance safeguard, ensuring the incorporation relief cannot be exploited by restructuring ownership shares to reduce tax liability.