Where a lease has been notified to us and is later assigned or terminated (for any reason, including a renunciation of the lease), the assignor or (in the case of the termination of a lease) the tenant at the point of termination must make a further LBTT return to us within 30 days of the day after the lease was assigned or terminated.
Note: The date on which the lease is assigned or terminated is the ‘relevant date’ for the purposes of the ‘relevant date’ field in the LBTT return.
The date the LBTT return is required to be made by is the filing date (see LBTT1000). See LBTT6027 for guidance on the responsibilities that the assignee assumes after the effective date of an assignation.
Note: The Keeper will register an assignee’s interest in the lease (as long as the assignee has complied with any LBTT requirements they might have) even if the assignor has failed to make a LBTT return (and pay any additional tax) required upon the assignation.
The LBTT return the assignor or (in the case of a termination of a lease) the tenant makes must include an assessment of the amount of tax chargeable reflecting any changes that have been to the lease since the previous return was submitted (either the first return or the return made at the last three year review – it is important to note that in the case of an assignation the assignee will still be required to make a LBTT return on every third anniversary of the effective date of the lease, and this cycle does not start again upon assignation. An assignation made in year two, for example, will still require a return in year three, unless it is terminated before then).
If it is calculated that more tax is payable, payment of the additional tax due must be made at the same time as the LBTT return is made.
Guidance on How to make an LBTT return and pay tax is available separately on our website.
Once the LBTT return has been made, subject to certain restrictions it can be amended up to 12 months after the filing date - see LBTT4006.
If it is calculated that less tax is payable at the date of the assignation or termination because of changes that have been made to the lease since the last return was made, then a claim for repayment of tax should be submitted to us in the LBTT return.
A claim for repayment may arise, for example, because rent reviews or turnover rents turned out to be less that had previously been estimated. This does not include a claim for repayment of tax in relation to the reduction of the term of the lease arising from either the assignation or the termination of the lease itself.
A tenant who fails to make a LBTT return to us by the filing date is liable to a penalty (see RSTP3005). If the return contains an inaccuracy, the tenant may also be liable to a penalty (see RSTP3011).
A tenant who fails to pay tax prior to the expiry of 30 days after the date payment is due (the day the LBTT return is made) is liable to a penalty (see RSTP3008). Interest will be charged however on the amount of any unpaid tax from the filing date until the date it is paid (see RSTP4002).
A tenant required to make a LBTT return to us, or who is the tenant in a land transaction which is not notifiable, is also required to keep and preserve certain records. See LBTT9001 for further guidance.