Guidance on Further LBTT Return When Relief is Withdrawn

Further LBTT Return When Relief Is Withdrawn

If an LBTT relief claimed on a property transaction is later withdrawn, or was not due in full, the buyer will usually need to file a further LBTT return with Revenue Scotland and pay the extra tax within 30 days of the relevant event. The extra tax is worked out as if the relief had never applied, using the rates and bands in force on the original effective date of the transaction.

• This rule applies where certain LBTT reliefs, such as group relief, charities relief, multiple dwellings relief and some others, are later lost in whole or in part.
• The buyer must not wait for Revenue Scotland to act; they must file a further return themselves if a relevant event causes the relief to be withdrawn.
• The filing and payment deadline is 30 days starting on the day after the relevant event that triggers the withdrawal.
• The tax due is the amount that would have been payable on the original transaction if the relief had not been available, using the original rates and bands, not current ones.
• Partial withdrawal of relief can still trigger a further return, so it is important to check whether the relief has been reduced as well as fully lost.
• For leases, special rules apply because filing the further return can start or reset the 3-yearly review cycle, using the relevant event date as the new reference point.

Scroll down for the full analysis.

Further LBTT return when a relief is withdrawn

This page explains what happens if you claimed a Land and Buildings Transaction Tax relief, but that relief is later withdrawn or turns out not to have been due in full. In that situation, the buyer must usually file a further LBTT return and pay the extra tax within a strict 30-day deadline. This matters because the obligation arises after the original transaction, often when circumstances change.

What this rule is about

Some LBTT reliefs are not unconditional. A relief may be available when the original return is filed, but later events can cause it to be withdrawn, either wholly or partly. In other cases, it may later become clear that the relief was never due to the extent claimed.

The rule dealt with here is the mechanism for correcting that position. It requires the buyer to make a further return to Revenue Scotland and self-assess the tax that becomes payable as a result of the relief being lost.

The guidance specifically refers to reliefs for certain acquisitions of residential property, multiple dwellings relief, alternative finance investment bonds, group relief, reconstruction and acquisition relief, charities relief, and sub-sale development relief.

What the official source says

Revenue Scotland says that where one of the listed reliefs has been withdrawn, or is otherwise found not to have been due to any extent, the buyer must make a further LBTT return.

That return must include an assessment of the tax now chargeable. The amount to be assessed is the tax that would have been chargeable on the transaction if the relief had not been available.

The return must be filed before the end of 30 days beginning with the day after the relevant event occurred. The tax due must be paid at the same time.

The guidance also explains that the events which can trigger withdrawal of relief are set out in the guidance for the individual reliefs and are listed in section 33(4) of the Land and Buildings Transaction Tax (Scotland) Act 2013. For return purposes, the date the relevant event occurs is the “relevant date”.

For leases, special rules apply to how the further return interacts with the 3-yearly review cycle under Schedule 19. The tax chargeable following withdrawal of relief is calculated using the tax rates and bands that applied at the effective date of the original transaction.

What this means in practice

The key practical point is that the buyer cannot simply wait for Revenue Scotland to raise the issue. If a relief is lost, the buyer must take action.

You should think of the further return as a corrective return triggered by a later event. Its purpose is to bring the tax position back to what it would have been if the relief had not applied.

In practice, this means asking three questions:

• Was one of the specified LBTT reliefs claimed?
• Has a later event happened that causes the relief to be withdrawn, or has it become clear that the relief was not due in full?
• If so, what LBTT would have been payable on the original transaction without that relief?

If the answer is yes, a further return is normally required, and the filing and payment deadline is short. The 30-day period starts on the day after the relevant event.

The amount due is not recalculated using current rates. The guidance is clear that the tax is calculated by reference to the rates and bands in force at the effective date of the original transaction. That is particularly important where rates have changed since the original purchase or lease was entered into.

How to analyse it

A sensible way to analyse the issue is as follows.

First, identify the relief originally claimed. Different reliefs have different conditions and different events that can cause withdrawal.

Second, identify the relevant event. The official guidance for the particular relief should be checked, along with section 33(4) of the 2013 Act. The date of that event matters because it starts the 30-day filing period and is also used as the relevant date in the return.

Third, work out whether the relief is withdrawn in full or only in part. The guidance says a further return is required where the relief is withdrawn “to any extent”, so a partial loss of relief can still trigger the obligation.

Fourth, calculate the tax that would have been chargeable had the relief not been available. That requires you to revisit the original transaction and apply the rates and bands in force at that time.

Fifth, consider whether the transaction is a lease. If so, you must also consider the effect on the 3-yearly review cycle.

For leases, the guidance distinguishes between full and partial relief:

• If full relief was claimed on the original lease return, there may have been no 3-yearly review returns up to that point. Once a section 33 return is filed because the relief is withdrawn, the lease enters the 3-yearly review cycle, with the review date running from the relevant event.
• If only partial relief was claimed, 3-yearly review returns would already have been required. In that case, filing the section 33 return resets the cycle so that the next review date runs from the relevant date, and the original cycle is switched off.

Revenue Scotland also says that the next 3-yearly review return filed after the section 33 return must reflect changes since that relevant date, and the figures in that review return must align with the figures in the section 33 return.

Example

Illustration: a company claims group relief on a land transaction. Later, an event occurs that causes the relief to be withdrawn under the rules for that relief. The company must file a further LBTT return within 30 days beginning with the day after that event. In the return, it must calculate the LBTT that would have been due on the original transaction if group relief had never been available, using the rates and bands in force at the original effective date, and pay that tax when filing the return.

Lease illustration: a tenant files an original lease return claiming full relief, so no tax is due. Later, the relief is withdrawn in part. A section 33 return must then be filed. From that point, the lease enters the 3-yearly review system, and the next review date is the third anniversary of the relevant event.

Why this can be difficult in practice

The difficult part is often not the filing mechanics but identifying whether a relevant event has actually occurred, and exactly when. That depends on the detailed conditions of the particular relief.

Another difficulty is that withdrawal can be partial. The guidance makes clear that even a partial loss of relief can require a further return, so it is not enough to ask whether the relief has failed completely.

Leases add another layer of complexity. The interaction between relief withdrawal, section 33 returns, and the 3-yearly review cycle means that timing and consistency of figures matter. A buyer needs to track which review cycle now applies and ensure later lease returns follow on from the section 33 position.

It is also easy to assume that the extra tax should be calculated using current rates. The guidance says otherwise. The correct reference point is the rates and bands in force at the effective date of the original transaction.

Key takeaways

• If a claimed LBTT relief is later withdrawn, or was not due in full, the buyer must usually file a further LBTT return.
• The deadline is 30 days from the day after the relevant event, and the tax must be paid when the return is filed.
• The extra tax is calculated as if the relief had not been available, using the rates and bands in force at the original effective date.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Further LBTT Return When Relief is Withdrawn

View all LBTT Guidance Pages Here