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Scottish government consults on LBTT group relief amendment

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The Scottish government is consulting until 13 April 2018 on draft amending regulations which confirm that the existence of a relevant ‘share pledge’ will not prevent group relief being available for land transactions within a corporate group structure.

Revenue Scotland published an LBTT technical bulletin on 28 December 2017, setting out its view that where there is a transfer of property within a corporate group and there is a relevant share pledge, meaning the person holding the pledge could obtain control of the subsidiary (transferee) but not the parent (transferor), this is an ‘arrangement’ which, by virtue of Land and Buildings Transaction Tax (Scotland) Act 2013, Sch 10(3), would not qualify for group relief and LBTT would be payable on the market value of the property transferred.

The Scottish government announced earlier this month its intention to bring forward secondary legislation to make group relief available where there is a land transaction within a corporate group structure and there is a relevant extant share pledge.

The consultation paper sets out the rationale for the change, which will remove an inconsistency between SDLT and LBTT to prevent a potential competitive disadvantage for companies operating in Scotland. It notes that share pledges are a standard feature of banking arrangements within Scotland, routinely required by lenders. The UK government enacted the relief, previously contained in an extra-statutory concession, in SI 2013/234 with effect from 1 March 2013.

The paper invites comments by 13 April on the draft Land and Buildings Transaction Tax (Group Relief Amendment) (Scotland) Regulations 2018, contained in Annex A.



Issue: 1393
Categories: News