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

Question 2 Responses

20. The second question: "Do you consider that the proposed amendment to the legislation will reduce the effectiveness of existing arrangements or result in any new areas of potential tax avoidance?" This received eleven "no" responses and a single "yes" response.

21. The respondent that considered the draft SSI could potentially reduce the effectiveness of existing arrangements explained that the lack of retrospective application of the draft SSI could increase areas of potential or further tax avoidance, but that if their suggestions were accepted there would be no additional risk of avoidance.

22. Respondents that commented in support of their position that the change would not create new opportunities for avoidance highlighted the targeted anti-avoidance provisions and broader General Anti-Avoidance Rule in place for LBTT and the experience of the relevant provisions in SDLT. With regard to this, KPMG stated, " LBTT group relief only applies in specific circumstances where a number of conditions are met. In our experience the comparable provision in relation to SDLT group relief has not been used for tax avoidance purposes. We note that the LBTT legislation already contains a targeted anti-avoidance provision ( LBTT(S)A 2013 Sch 10 para 8) and a general anti-avoidance rule ( RSTPA 2014 Pt 5)." Alongside this, the Chartered Institute of Taxation noted that: "We do not think that the amendment will reduce the effectiveness of existing arrangements or result in new areas of potential tax avoidance. Rather, failure to make the amendment will mean that group relief is denied in common and wholly commercial circumstances, with adverse consequences for investment in Scottish property".