Land and Buildings Transaction Tax review: Scottish government policy evaluation 2025-2026

Scottish Government Response to Section B

We welcome the valuable time and input of the Working Group as part of this initial evaluation. Their experience of complex cases and their informed reflections across a wide range of sensitive, theoretical scenarios provide an essential evidence base that will help guide the next stages of this review, as determined by Scottish Ministers in the next Scottish Parliament.

Taken together, the themes emerging from the Group highlight the need to balance legislative clarity, administrative feasibility, fairness to taxpayers, and the protection of revenue in any future approach.

It is also clear from the evidence gathered that the types of situations often described as “exceptional circumstances” vary considerably in their nature and complexity. For example, structural or safety‑related issues, such as cladding or RAAC, raise different considerations from circumstances linked to domestic abuse, disability‑related purchases, or transactional failures.

Given these differences, any further work taken forward in the next Parliamentary term may need to involve examining these categories separately, rather than through a single unified approach. This would allow each area to be considered on its own merits, recognising that the legislative, operational and evidential implications may differ significantly between them.

A more detailed summary of the findings from the work to date is set out below.

Legislative Clarity and Interpretation

Members of the Working Group placed strong emphasis on the need for legislative clarity, especially in relation to the ambiguous concept of “exceptional circumstances”.

Discussions highlighted the challenges of applying subjective terms fairly, particularly where taxpayers view events such as illness, bereavement, or financial hardship as exceptional.

It is clear from deliberations that any future legislation would need to be drafted with precision to avoid uncertainty, inconsistent decision‑making, or disputes.

Evidence Requirements and Ethical Considerations

Discussion has highlighted challenges around the evidence requirements for any provision and the ethical and practical difficulties of assessing sensitive personal situations. Participants in the working group emphasised that evidence gathering should never retraumatise victims of domestic abuse, nor place RS staff in the inappropriate role of interpreting medical or personal records.

Issues around data protection, especially where a taxpayer may need to disclose information relating to someone else (such as a disabled family member), were raised as important considerations for future policy design.

Individual and Group-Based Circumstances

The working group offered valuable observations on the distinction between individual and group-based exceptional circumstances, and the potential value of targeted legislative responses to clearly defined cohort issues such as cladding or RAAC. However it is clear that, even within group-based frameworks, taxpayer behaviour would still require assessment, and the risk of inconsistent or subjective judgments would remain.

Provisional or Conditional Relief Mechanisms

Participants highlighted that significant operational and legislative challenges could arise from the introduction of provisional or conditional relief mechanisms. These included the need for long-term monitoring, interaction with the property registration system, and the heightened risk of speculative or avoidance-driven claims. Any such mechanisms could impose disproportionate burdens on Revenue Scotland.

Avoidance Risks and System Integrity

The need to consider avoidance risks were highlighted repeatedly in discussions, with members stressing the importance of designing any relief in a way that is robust, resistant to manipulation, and does not unintentionally create new avenues for aggressive tax planning.

Appeal Rights

There was a strong consensus amongst the working group on the importance of appeal rights were any new arrangements to be introduced in future. This was on the basis that fairness and confidence in the system would require Scottish taxpayers to have access to independent review.

Fairness and Impact on Vulnerable Taxpayers

Across all discussions, the Group emphasised the importance of fairness, particularly for vulnerable individuals facing hardship. Whether considering evidentiary thresholds, administrative processes, or the design of relief mechanisms, members were consistent in advocating for a system that is compassionate where needed but also clear, enforceable, and sustainable.