Revenue Scotland has overturned its original stance on the use of partial charities relief for Scottish land and buildings transaction tax (LBTT), the equivalent to UK stamp duty, in cases where a charity is one of a number of buyers who are or will become common owners
In line with a recent ruling the UK tax tribunal, Revenue Scotland has confirmed that charities relief from LBTT may be claimed for the charity’s (or charities’) pro indiviso share(s) of the relevant land transaction. This relief will also be available for retrospective claims.
The decision refers to the application of schedule 13 of the Land and Buildings Transaction Tax (Scotland) Act 2013 (LBTTA).
The issue was raised in the Upper Tribunal (Tax and Chancery Chamber) and at the Court of Appeal in the case of (1) The Pollen Estate Trustee Company Limited and (2) King’s College London v HMRC (Pollen), in relation to the UK stamp duty land tax (SDLT).
The Pollen judgment raised questions about consistency of policy and how the statute should be interpreted as a result. Although there are similarities between the LBTTA and the UK legislation, Revenue Scotland stated that it ‘neither accept(ed) nor refute(d) the possible application of the Pollen judgment to LBTT and consider that remains uncertain. But we have reviewed the potential implications of the matters discussed in Pollen and the application of LBTTA schedule 13 in cases of common ownership’.
As a result of these two cases Revenue Scotland has accepted that the preferred reading of Schedule 13 allows the application of its provisions to one or more, but not all, parties entering into common ownership, based on the individual interests of the different parties.
Revenue Scotland will no longer refuse claims to partial charities relief in such cases where appropriate criteria are met.
Retrospective claims are allowed. If the relevant return is still available for amendment online (within 12 months), the return may be amended online.
If this is not possible, or if relief was claimed and refused, taxpayers should write to Revenue Scotland, PO Box 24068, Victoria Quay, Edinburgh, EH6 9BR, setting out the circumstances and how much relief is now being claimed. All applications must include the RS number of the relevant return.
The Revenue Scotland guidance on partial charities relief LBTT3035 has been amended to reflect this new position and to explain how to calculate partial charities relief.