Revenue Scotland LBTT: Guidance on LBTT return when contingency ends or consideration becomes known.

LBTT Return Guidance

This page provides guidance on submitting a Land and Buildings Transaction Tax (LBTT) return when a contingent, uncertain, or unascertained consideration becomes known. It outlines the necessary steps and requirements for taxpayers in such scenarios.

• Explains when a further LBTT return is required.
• Details the process for ascertaining previously uncertain considerations.
• Clarifies the implications of contingencies ceasing.
• Provides links to relevant LBTT legislation and guidance documents.

Understanding Land and Buildings Transaction Tax (LBTT) Returns in Scotland

The Land and Buildings Transaction Tax (LBTT) is a tax applied to land transactions in Scotland. It replaced the UK Stamp Duty Land Tax (SDLT) in Scotland from 1 April 2015. This article will guide you through the process of LBTT returns, focusing on situations where the consideration becomes known or a contingency ceases. We will explore what this means, when you need to submit a further return, and how to do it.

What is LBTT?

LBTT is a tax on land and property transactions in Scotland. It applies to both residential and non-residential transactions, including leases. The tax is progressive, meaning that the rate increases with the value of the property. The rates and bands for LBTT are set by the Scottish Government and can change over time.

When is a Further LBTT Return Required?

In certain situations, you may need to submit a further LBTT return. This is required when a contingent, uncertain, or unascertained consideration becomes known. Let’s break down these terms:

• Contingent Consideration: This is a payment that depends on a future event. For example, if the purchase price of a property depends on obtaining planning permission, the consideration is contingent.
• Uncertain Consideration: This is when the amount to be paid is not known at the time of the transaction. For instance, if the price is based on future turnover, it is uncertain.
• Unascertained Consideration: This is when the amount is not fixed and will be determined later, such as a share of future profits.

When any of these considerations become known, you must submit a further LBTT return to Revenue Scotland. This ensures that the correct amount of tax is paid based on the final consideration.

How to Submit a Further LBTT Return

Submitting a further LBTT return involves several steps. Here is a straightforward guide to help you through the process:

Step 1: Determine the Final Consideration

First, you need to determine the final consideration. This means calculating the total amount that has become known. It includes any contingent, uncertain, or unascertained amounts that have now been finalised.

Step 2: Complete the LBTT Return Form

Once you know the final consideration, you need to complete the LBTT return form. This form is available on the Revenue Scotland website. Ensure that you fill in all the required details accurately.

Step 3: Submit the Return

After completing the form, submit it to Revenue Scotland. This can usually be done online through their website. Make sure to keep a copy of the submitted return for your records.

Step 4: Pay Any Additional Tax

If the final consideration is higher than initially declared, you may need to pay additional tax. Revenue Scotland will calculate the additional amount due based on the final consideration. Ensure you pay this promptly to avoid any penalties.

Examples of When a Further Return is Needed

To make this clearer, let’s look at a couple of examples:

Example 1: Contingent Consideration

Imagine you purchase a piece of land for £200,000, with an additional £50,000 payable if planning permission is granted. Initially, you pay LBTT on the £200,000. Six months later, planning permission is granted, and the additional £50,000 becomes payable. At this point, you must submit a further LBTT return to account for the extra consideration.

Example 2: Uncertain Consideration

Suppose you buy a commercial property with a price based on future turnover. Initially, you estimate the turnover and pay LBTT on this amount. After a year, the actual turnover is calculated, and the final price is determined. If this differs from the initial estimate, a further LBTT return is required to adjust the tax paid.

Penalties for Late Submission

It is important to submit any further LBTT returns promptly. Failing to do so can result in penalties. Revenue Scotland imposes fines for late submissions, which can increase over time. To avoid these penalties, ensure you are aware of any changes in consideration and submit the necessary returns as soon as possible.

Resources and Further Reading

For more detailed guidance on LBTT and further returns, you can visit the Revenue Scotland website. They provide comprehensive information and resources to help you understand your obligations. Here are some useful links:

• LBTT Return Guidance
• LBTT Overview

Conclusion

Understanding when and how to submit a further LBTT return is essential for anyone involved in property transactions in Scotland. By staying informed and following the correct procedures, you can ensure compliance with the law and avoid unnecessary penalties. Always keep an eye on any changes in consideration and act promptly to submit any required returns.

For more information and assistance, do not hesitate to consult the resources available on the Revenue Scotland website. They offer valuable insights and support to help you navigate the complexities of LBTT.

Useful article? You may find it helpful to read the original guidance here: Revenue Scotland LBTT: Guidance on LBTT return when contingency ends or consideration becomes known.

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