Guidance on Further LBTT Return When Relief is Withdrawn

Further LBTT Return When Relief Is Withdrawn

If a claimed LBTT relief is later withdrawn, or turns out not to have been due in full, the buyer must file a further LBTT return with Revenue Scotland. The buyer must recalculate the tax as if the withdrawn relief had not applied, using the rates and bands from the original transaction date, and file the return and pay any extra tax within 30 days of the relevant event.

• This rule applies where certain LBTT reliefs, such as group relief, charities relief, multiple dwellings relief or sub-sale development relief, are later lost in full or in part.
• The buyer must identify the relevant event that caused the relief to be withdrawn and use that date to start the 30-day filing deadline.
• The further return must assess the tax that would have been due if the withdrawn part of the relief had never been available.
• Any extra LBTT must be paid at the same time the further return is filed.
• For leases, filing a section 33 return can start or reset the 3-yearly review cycle, depending on whether full or partial relief was originally claimed.
• The main practical issues are working out whether relief has been withdrawn, whether the withdrawal is partial, and ensuring later lease review returns match the section 33 figures.

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Further LBTT return when a relief is withdrawn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 and later lose some or all of that relief. In that situation, Revenue Scotland requires a further LBTT return. The key point is that the buyer must reassess the tax as if the relief had not been available to the extent it has been withdrawn, and must file and pay within a short time limit.

What this rule is about

Some LBTT reliefs are not simply decided once and then fixed forever. They may be withdrawn later if a specified event happens, or if it turns out the relief was not due in full. Section 33 of the LBTT legislation deals with this by requiring a further return.

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

The rule matters because an earlier LBTT return may have shown reduced tax, or no tax, on the basis that relief was available. If that position later changes, the buyer must correct it through a further return rather than waiting for Revenue Scotland to raise the issue.

What the official source says

Revenue Scotland says that where one of the listed reliefs was claimed and is later 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 assess is the tax that would have been chargeable on the transaction if the relief had not been available.

The return must be made before the end of 30 days beginning with the day after the relevant event occurs. Any tax due must be paid at the same time as the return is made.

The guidance also says that the events which can trigger withdrawal of relief are set out in the guidance for each relief and are listed in section 33(4) of the LBTT(S)A 2013. For return completion purposes, the date the relevant event occurs is the “relevant date”.

What this means in practice

If you claimed relief on the original transaction and something later happens that causes the relief to be withdrawn, you do not revisit the transaction informally. You must file a formal further LBTT return.

The practical steps are:

• identify whether a relevant event has occurred under the rules for the particular relief claimed;
• work out how much of the relief is lost;
• recalculate the LBTT that would have been due without that relief, to the extent it is withdrawn;
• submit the further return within 30 days starting the day after the relevant event; and
• pay the tax due when filing the return.

The guidance is framed around the buyer’s obligation. So even if the issue comes to light later, the buyer is expected to make the further return once the relevant event has occurred or the relief is found not to have been due.

For leases, the position is more technical because the withdrawal of relief also affects the ongoing 3-yearly review cycle.

How to analyse it

A sensible way to approach this is to ask the following questions.

• Which relief was claimed? The trigger for withdrawal depends on the specific relief.
• Has a relevant event occurred? The answer comes from the legislation and the guidance for that relief.
• When did that event occur? That date matters because it starts the 30-day filing window and is the relevant date for the return.
• Is the relief withdrawn in full or only in part? The guidance allows for relief to be withdrawn “to any extent”.
• What tax would have been chargeable if the relief had not been available? That is the basis of the assessment in the further return.
• If the transaction is a lease, how does this affect the 3-yearly review cycle?

For leases, Revenue Scotland draws an important distinction between full relief and partial relief.

• If full relief was claimed on the original lease return, there may have been no 3-yearly review returns so far. If the relief is later withdrawn, a section 33 return is required. Filing that return brings the lease into the 3-yearly review cycle. The next review is due on the third anniversary of the relevant event.
• If only partial relief was claimed, 3-yearly review returns would already have been required. If the relief is later withdrawn, a section 33 return is still required, but the 3-yearly review cycle restarts from the relevant date. The old cycle from the original return stops, and the next review is due on the third anniversary of the relevant date.

In either lease case, later review returns must align with the figures used in the section 33 return.

The guidance also makes clear that the tax is calculated using the tax rates and bands in force at the effective date of the original transaction. In other words, you do not use the rates in force when the relief is withdrawn.

Example

This is an illustration of the mechanism only. A buyer claims an LBTT relief on a land transaction and pays less tax as a result. Later, an event happens that means the relief is withdrawn in part under the rules for that relief. The buyer must identify the date of that event, treat it as the relevant date, recalculate the tax that would have been due without the withdrawn part of the relief, file a further LBTT return within 30 days starting the day after that date, and pay the extra tax at the same time.

If the transaction was a lease and the relief had previously eliminated any tax charge, filing the section 33 return would also start the lease’s 3-yearly review cycle from the relevant date.

Why this can be difficult in practice

The main difficulty is usually not the filing obligation itself, but identifying whether and when the relief has actually been withdrawn. That depends on the detailed conditions of the specific relief claimed. Different reliefs have different trigger events.

Another difficulty is partial withdrawal. The guidance says relief can be withdrawn “to any extent”, which means the buyer may need to work out how much of the original relief remains available and how much is lost.

Leases add another layer of complexity because the section 33 return affects the 3-yearly review timetable. It is important to use the relevant event date correctly, both for the return and for the next review date, and to ensure later review returns are consistent with the section 33 figures.

A further point that can be missed is the rate calculation. Even though the withdrawal happens later, the tax is recalculated by reference to the rates and bands at the effective date of the original transaction, not by reference to later rates.

Key takeaways

• If an LBTT relief is later withdrawn, or was not due, the buyer must usually file a further LBTT return.
• The return and payment are due within 30 days beginning with the day after the relevant event.
• For leases, a section 33 return can start or reset the 3-yearly review cycle, and the tax is still calculated using the original transaction’s rates and bands.

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

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