- Assignation of lease
Where a lease has been notified to Revenue Scotland and is later assigned, the assignor (the outgoing tenant) must make a further LBTT return to Revenue Scotland within 30 days of the day after the lease was assigned.
Note: The date on which the lease is assigned is the ‘relevant date’ for the purposes of the ‘relevant date’ field in the LBTT return.
The LBTT return made by the assignor must include an assessment of the amount of tax chargeable reflecting any changes that have been made 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 (the new tenant) will still be required to make an LBTT return on every three-yearly review date of the effective date of the original lease. 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 the lease is terminated before then.
See LBTT6027 for guidance on the responsibilities that the assignee assumes after the effective date of an assignation.
This requirement does not apply to leases which have been exempt from charge by virtue of a full relief being claimed on the first return. Although where the assignee is not eligible to claim the relief that was claimed in the first return, there are specific rules which may treat the assignation as being the grant of a new lease (see LBTT6026).
Note: The Keeper of the Registers of Scotland will register an assignee’s interest in the lease where the assignee has submitted an LBTT return (where the assignation comprises a notifiable transaction) and made arrangements to pay any LBTT due on the transaction. The Keeper will not, however, consider whether the assignor has complied with their separate duty to submit a review return required upon the assignation and paid any additional tax due.
- Termination of a lease
Where a lease has been notified to Revenue Scotland and is later terminated for any reason (including a renunciation of the lease), the tenant at the point of termination must make a further LBTT return to Revenue Scotland within 30 days of the day after the lease is terminated.
Note: The date on which the lease is terminated is the ‘relevant date’ for the purposes of the ‘relevant date’ field in the LBTT return.
The LBTT return made by the tenant must include an assessment of the amount of tax chargeable reflecting any changes that have occurred since the previous LBTT return was submitted (either the first return, the return made at the last three-year review, or on assignation).
This requirement does not apply to leases which have been exempt from charge by virtue of a full relief being claimed on the first return.
The date the LBTT return must be made by is the filing date. If it is calculated that more tax is payable, payment of the additional tax must be made at the same time as the LBTT return is made.
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 Revenue Scotland in the LBTT return.
A claim for repayment may arise, for example, because rent reviews or turnover rents turned out to be less than had previously been estimated.
Note: An LBTT return must still be submitted even if there have been no changes to the lease, or if no additional tax is payable.
Guidance on how taxpayers can make a LBTT return and pay tax is available separately on the Revenue Scotland 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.
A tenant who fails to make a LBTT return to Revenue Scotland 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 an LBTT return to Revenue Scotland 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.