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LBTT – As easy as 1-2-3?

The requirement to make three yearly Land and Building Transaction Tax (“LBTT”) Returns for relevant Commercial Leases should be easy – provided you remember about it!

Despite the requirement being in place since 1 April 2015, for some commercial tenants it is still a fairly new concept (especially as there is no similar requirement under the SDLT regime south of the border) and so we are finding many who are either:

  • Not aware of the requirement at all; or
  • Simply forgetting about it.

If you are a Tenant taking a new lease that is notifiable for LBTT purposes, following submission of the initial Return, you should-

  • Keep a record of that Return (and all subsequent Returns); and
  • Most importantly, diarise the dates to make the three yearly LBTT Returns.

Returns should be made within thirty days of the third anniversary of the relevant date of the Lease (the relevant date is normally the date of entry or, if different, the effective date of the lease). At that point, the Tenant must make a Return, capturing any relevant change(s) that have taken place over the last three years of the lease and, if necessary, make payment of any further tax due or, if lucky, claim a refund
If submission of the Return is late, an initial penalty of £100 is due. If the Return is still outstanding after three months, the penalty increases to £10 a day. Further penalties apply for late payment of tax with interest payable in addition.

Revenue Scotland are issuing reminders at present, however, my advice is not to rely on this as your sole reminder as Revenue Scotland have stated that they will not accept failure to receive a reminder as an excuse for failure to submit a Return.

Accordingly, when you get to year three of your Commercial Lease, remember about LBTT.

Feel free to get in touch with me or any member of the Commercial Team here at Balfour+Manson LLP if you have any queries on the three yearly LBTT Returns. We can discuss the requirement with you, assess the position and complete the Return for you (if applicable).

We will help you make year three easy.