LBTT group relief proposal goes to brief consultation
A brief consultation is now running on a proposed amendment to the Land and Buildings Transaction Tax (Scotland) Act 2013 that has been backed by the Law Society of Scotland.
The change would allow group relief to apply where there is a land transaction between one company and another company within its corporate group structure, and there is a share pledge or equivalent arrangement in place.
It reflects the original policy intention that LBTT group relief arrangements should operate in a similar way to stamp duty land tax (SDLT) and the Scottish Government’s commitment to ensure Scotland remains an attractive place to invest and do business.
Ahead of the Scottish budget last December, the Society pointed out that the current position means that when such internal company group transfers take place, LBTT is payable on the market value of the property transferred, "which is proving to be a big concern not just for the property sector, but for many companies which own and run their businesses from properties in Scotland". The Society believed this acted as a disincentive to investment in Scotland, as it impacted on share pledges which are a common form of security and routinely required by lenders.
The new consultation is intended to help ensure that the secondary legislation introduced to the Scottish Parliament on this matter fully addresses the issue, allowing for group relief to be claimed in the relevant circumstances once it is in effect.
Given its technical nature, awareness of the issue and a wish to introduce legislation at the earliest sensible opportunity, the consultation will run for an abbreviated period from 19 March to 13 April 2018. Legislative proposals will then be brought forward for scrutiny by the Scottish Parliament. The Scottish Government will meantime complement the consultation process with active engagement with stakeholders.