Land and Buildings Transaction Tax: amendment to group relief - analysis of responses and Scottish Government response

Introduction

1. Land and Buildings Transaction Tax ( LBTT) introduced by the Land and Buildings Transaction Tax (Scotland) (Act) 2013 ('the Act') replaced UK Stamp Duty Land Tax ( SDLT) in Scotland from 1 April 2015. It is a tax applied to residential and non-residential land and buildings transactions (including non-residential leases) where there is an acquisition of a chargeable interest.

2. Schedule 10 of the Act makes provision for the availability of 'group relief'. Subject to certain rules, this provides relief from LBTT for transactions between companies within a corporate group that would otherwise be chargeable to tax and on which tax would be payable. The rationale for the relief is that there is no overall change in economic interest or benefit when a land transaction occurs between companies within the same corporate group.

3. On 28 December 2017, Revenue Scotland ( RS) published a technical bulletin setting out their view that where there is a transfer of property within a corporate group and there is a relevant share pledge which means that the person holding the pledge could obtain control of the subsidiary but not the parent this is an 'arrangement' which, in accordance with paragraph 3 of schedule 10 of the Act, means that group relief would not be available and LBTT would be payable on the market value of the property transferred.

4. In light of stakeholder concerns about this, and following consideration of this issue, the Cabinet Secretary for Finance and the Constitution laid draft legislation in parliament on 17 May 2018 to make clear that group relief would be available in these types of transactions.

5. A consultation on a draft Scottish Statutory Instrument ( SSI), intended to amend the group relief provisions in Schedule 10 of the Land and Buildings Transaction Tax (Scotland) (Act) 2013 ('the Act') to provide for this subsequently ran from 19 March to 13 April. This report presents an overview of findings from the analysis of responses to that consultation. In addition, it sets out the Scottish Government's response and provides detail of how we have amended the proposed draft legislation laid in parliament on 17 May 2018.

6. The Scottish Government would like to thank all respondents for their contributions.

7. Where granted permission, responses have been published in full on the Scottish Government Consultation Hub website.