On 1 April 2015, the Land and Buildings Transaction Tax ("LBTT") regime was introduced to Scotland to replace the Stamp Duty Land Tax system.

One of the biggest changes under the LBTT regime was the introduction of the obligation for regular returns to be submitted in respect of commercial Leases. If you are the Tenant under an LBTT lease in Scotland, you may therefore shortly be required to submit a further LBTT return. The first 3-yearly returns will fall due from 1 April 2018.

The Obligation

  • Revenue Scotland require a further LBTT return to be submitted by the tenant at every third anniversary of the effective date under a lease and any additional LBTT paid or overpaid LBTT reclaimed. A review return must be submitted regardless of whether there have been any changes to the lease
  • Further returns must be made within 30 days of the relevant 3 year anniversary and penalties will apply if they are not submitted on time, regardless of whether any additional tax is due. Any additional LBTT due must be paid at the time of submitting the return
  • The obligation only applies to leases that were notifiable for LBTT purposes when originally granted
  • Tenants should also be aware that further returns are also required to be submitted if a lease is assigned or terminated.

The Process

  • Revenue Scotland have now confirmed that they will be issuing reminders to tenants to submit the three-yearly return, however the responsibility will lie with the tenant regardless of whether a reminder is received. It is therefore essential that suitable diary reminders are in place
  • The returns can be filed online by Solicitors or Agents using the established Scottish Electronic Tax System, or Revenue Scotland are due to introduce a new online lease review return which will be available to tenants only from 1 April 2018.