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

An analysis and Scottish Government response to the Land and Buildings Transaction tax Group Relief consultation

Question 1 Responses

15. The first question in the consultation asked; " Do you agree that the draft instrument provided for in Annex A will achieve an outcome consistent with the equivalent group relief arrangements available under SDLT?"

16. Two of the replies stated that the draft instrument would achieve a consistent outcome with SDLT. Of these, one respondent, KPMG, explained they did not believe amendment was required based on a view that the relevant security arrangements do not constitute "arrangements under which at some later time a person could gain control of the buyer but not of the seller". The fact that no specific provision was incorporated into the LBTT group relief legislation was considered not to be determinative in concluding that group relief should be denied in such circumstances. Of the remaining replies, eight expressed a shared view that:

  • The draft SSI covered arrangements "analogous to a pledge" but in a way that suggested it did not cover actual share pledges.
  • The draft SSI used English law terms and should be drafted using Scots law terms.
  • The legislation should cover equivalent arrangements in jurisdictions outside of the UK.

17. Six respondents disagreed or objected to the "carve out" in the draft SSI that would result in the withdrawal of group relief if a lender was in position to exercise their rights in relation to a relevant security arrangement, regardless of whether or not they had done so or had any intention of doing so. One respondent explained "…we cannot see why group relief should be denied where a bank could have exercised its rights under security arrangements but did not exercise this right, as there will be situations where a bank need not exercise all enforcement options available to it. The SDLT provisions on group relief are not similarly limited".

18. The Law Society of Scotland provided further commentary on this stating, "We do not understand why group relief should be denied in these circumstances…it could be extremely difficult in practice to identify situations where this had happened. Banks do not always use all the remedies available to them where there have been defaults…"

19. Separately, five respondents provided statements requesting retrospective application of the draft SSI to LBTT group relief in their replies to question one. Finally, two respondents highlighted the Moveable Transactions (Scotland) Bill and requested that the Scottish Government consider this and any potential future impact on LBTT group relief provisions.


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