Revenue Scotland opinion on LBTT group relief - KPMG United Kingdom
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Revenue Scotland opinion on LBTT group relief

Revenue Scotland opinion on LBTT group relief

The opinion says that the relief is not available on an intra-group transfer of Scottish property where a bank has a share pledge over the shares in the buyer.


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We understand that Revenue Scotland have provided an opinion (the Scottish devolved tax equivalent of a non-statutory business clearance) that Land and Building Transactions Tax (LBTT) group relief is not available on the transfer of Scottish property by a parent company to a subsidiary (or between sister subsidiaries) where the parent has given a share pledge over the shares in the transferee subsidiary as security for borrowing. The position differs from the Stamp Duty Land Tax (SDLT) group relief position in the rest of the UK.

While neither relief will be available where there are arrangements under which a person could obtain control of the buyer but not the seller, the SDLT group relief legislation specifically excludes from those arrangements instances where a mortgagee has not yet exercised its security rights against a mortgagor. Due to a timing issue (the provision was incorporated into the SDLT legislation after the LBTT legislation had been drafted) this provision was not replicated in the LBTT group relief legislation. We consider that the SDLT provision in question is only for the avoidance of doubt and that, read purposively, the giving of security over shares does not constitute a disqualifying arrangement. Consequently, in our opinion the better view is that its omission from the LBTT legislation is not determinative.

A number of external bodies are currently raising their concerns with the Scottish Government that the LBTT group relief legislation should be amended to include a similar exclusion (efforts to persuade Revenue Scotland that the legislation is not needed have failed); however until the legislative amendments are made Revenue Scotland are likely to challenge the availability of the relief.

Please get in touch with your usual KPMG contact if you have any questions.

Ginny Offord


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