Check for LBTT

General

In terms of section 22(1)(c), an application for registration must not fall to be rejected by virtue of a prohibition in an enactment. Section 43 of the Land and Buildings Transaction Tax (Scotland) Act 2013 (LBTT) requires that a registrable deed evidencing a land transaction which must be notified to to Revenue Scotland must not be registered in any register maintained by the Keeper of the Registers of Scotland, unless (a) a land transaction return has been made in relation to the transaction, and (b) any tax payable in respect of the transaction has been paid.

Section 43 of the Act came into force on 1 April 2015, however the tax legislation that applies is dependent on the effective date of the land transaction. Where the effective date of the land transaction is prior to 1 April 2015, the requirements of Stamp Duty Land Tax (SDLT) under section 79 of the Finance Act 2003 will apply. Where the effective date of the land transaction is on or after 1 April 2015, the requirements of LBTT under section 43 of the Land and Buildings Transaction Tax (Scotland) Act 2013 will apply.

If a deed submitted for registration is a notifiable transaction and is submitted on or after 1 April 2015, the effective date of the land transaction must be identified and the applicable tax legislation requirements must be met to permit the Keeper to accept the application for registration.

Notifiable Transaction

A land transaction is notifiable unless it is:

1) An exempt transaction, that is:

Where there is no chargeable consideration for the land transaction,
Where the acquisition has been made by the Crown (in the form of Crown bodies),
The grant, assignation or renunciation of a lease of residential property, which is not a "qualifying lease", although such transactions are subject to certain conditions,
Where the transaction is in connection with divorce,
Where the transaction is in connection with the dissolution of a civil partnership,
Where the transaction is in implementation of a Will - the exception being where the person acquiring the property gives any consideration (other than the assumption of a secured debt),
Where the transaction is a variation of a testamentary disposition,
Interests in the seabed where the transaction relates to land below mean low water mark;

2) An acquisition of land where the chargeable consideration is less than £40,000;

3) An acquisition of a chargeable interest other than a major interest in land where the chargeable consideration does not exceed the nil rate tax band applicable to that transaction;

4) The grant of a lease for a period of 7 years or more where any chargeable consideration other than rent is less than £40,000 and where the relevant rent is less than £1,000;

5) The assignation or renunciation of a lease where the lease was originally granted for a period of 7 years or more and where the chargeable consideration for the assignation or renunciation is less than £40,000;

6) The grant of a lease for a period of less than 7 years where the chargeable consideration does not exceed the nil rate tax band applicable to the transaction;

7) The assignation or renunciation of a lease where said lease was originally granted for a period of less than 7 years and where the chargeable consideration for the assignation or renunciation does not exceed the nil rate tax band applicable to the transaction.

Crown bodies

A land transaction where the buyer is any of the following Crown bodies is an exempt transaction:

(a) the Scottish Ministers;

(b) the Scottish Parliamentary Corporate Body;

(c) a Minister of the Crown;

(d) the Corporate Officer of the House of Lords;

(e) the Corporate Officer of the House of Commons;

(f) a Northern Ireland department;

(g) the Northern Ireland Assembly Commission;

(h) the Welsh Ministers, the First Minister for Wales and the Council General to the Welsh Government;

(i) the National Assembly for Wales Commission;

(j) the National Assembly for Wales.

Qualifying lease - certain conditions

The grant, assignation or renunciation of a lease of residential property (which is not a “qualifying lease”) is an exempt transaction. “Qualifying lease” has the same meaning as in section 1 of the Long Leases (Scotland) Act 2012. Pursuant to section 1 of that Act, a residential lease is “qualifying” if:

It is registered in the Register of Sasines or the Land Register;
It was granted for more than 175 years;
It has more than 100 years left to run from the appointed day laid down under the Act.

Land below mean low water mark

For land transactions where the subjects comprise land both above and below the mean low water mark, only that part of the land above the mean low water mark is a chargeable interest.

The Effective Date

For the most part (i.e. dispositions), the effective date for a transaction will be the date of entry. There are exceptions to this rule, for example, the effective date in respect of the acquisition of an option or right of pre-emption is the date upon which the option or right is acquired (as opposed to when it becomes exercisable).

The effective date in respect of a lease transaction may be any one of the following:

Ordinarily, the effective date of a lease is the date when it is executed by the parties or constituted by any means.
Where the lease is constituted by missives of let, the effective date is the date of conclusion of missives.
Alternatively, where the formal lease is preceded by missives of let or agreement for lease, substantial performance is the effective date (substantial performance being either the date upon which the tenant takes possession of the subjects or the date upon which he makes the first payment of rent or the premium).
Where there has been substantial performance of a contract without completion, the effective date of the transaction is when the contract is substantially performed.
Where substantial performance of a contract requires a conveyance to a third party, the effective date of the transaction is when the contract is substantially performed. A further notifiable transaction with a separate effective date may arise at the point of conveyance to the third party. This may arise in a development situation where A contracts with B to build upon land and the parties agree that A will convey the houses to buyers found by B.

However, the effective date for a transaction may also vary according to the following:

Event	Effective Date
Where contingency ceases or where consideration is ascertained	the date of the event ^{^[1]}
Where relief is withdrawn	the date upon which the relevant event occurred ^{^[2]}
Where a return or further return is required in consequence of a later linked transaction	the date of the later transaction ^{^[3]}
Where a return is filed in respect of a triennial review of a lease	the third anniversary of the effective date of the transaction (and on each subsequent third anniversary of that date) ^{^[4]}
Where a further return is filed in respect of a lease which has been assigned or terminated	the date upon which said lease is assigned or terminated ^{^[5]}
Where a lease continues after the expiry of a fixed term	the date upon which the subsequent one year period of tacit relocation ends ^{^[6]}
Where a lease has been granted for an indefinite period	the date upon which the deemed fixed term ends ^{^[7]}
Where a previously non-notifiable lease is varied and subsequently becomes notifiable	the date upon which the variation takes effect ^{^[8]}

^[1] _{Section 31.}

^[2]_{Section 33.}

^[3] _{Section 34.}

^[4]_{Schedule 19, paragraph 10(7).}

^[5]_{Schedule 19, paragraph 11.}

^[6] _{Schedule 19, paragraph 20(3).}

^[7] _{Schedule 19, paragraph 22(2).}

^[8] _{Schedule 19, paragraph 30.}

Check for Compliance with Section 43

Prior to accepting an application for registration, a check will be completed to confirm that the application meets the requirements of section 22(1)(c). Checks will be completed to identify if the deed to be registered is a tax notifiable transaction and if so, to identify the effective date of the transaction. If the transaction is a tax notifiable transaction the effective date will determine whether the transaction is subject to the requirements of section 43 of the LBTT Act (i.e. on or after 1 April 2015) or whether the transaction is subject to the SDLT requirements under section 79 of the Finance Act 2003 (i.e. before 1 April 2015).

Where the transaction is subject to section 43 of the LBTT Act, the LBTT return will be processed by the Returns Processing Officer or a check will be completed by the intake officer on the Tax Server to confirm that the relevant LBTT provisions in relation to the transaction have been met. Where the conditions of section 43 have been met, the application form will be stamped as section 43 compliant, details of the tax record number will be added to the application form and application workdesk and the application will be created as normal. If the requirements of section 43 have not been met, the Keeper is prohibited from accepting the application in terms of section 22(1)(c) and the application must be rejected.

Discrepancy with consideration and amount paid in LBTT

Where the consideration stated in the DIR is "the price referred to in the Missives of Sale", the Keeper will base the registration Fee on the consideration quoted on the Application Form. Where this amount differs from the amount that LBTT was paid on, a match cannot be made and the application should be rejected in terms of section 22(1)(c).

Guidance

If the effective date of the land transaction is prior to 1 April 2015, refer to the SDLT page for guidance.

If the effective date of the land transaction is on or after 1 April 2015 and an SDLT has been submitted, refer to a senior officer.

If the effective date of the land transaction is on or after 1 April 2015 and the LBTT requirements have not been met, the application must be rejected as the applicant has failed to meet the requirement of section 22(1)(c). Refer to senior officer if there is any uncertainty as to the effective date or whether the deed to be registered is a notifiable transaction. 