LBTT Record Keeping Requirements and Penalties for Non-Compliance Explained

How long to keep LBTT records

LBTT records must be kept until the later of a minimum time limit and the end of Revenue Scotland’s enquiry period. For returns, the minimum is usually five years; for stand-alone claims outside a return, it is usually three years. Amendments, open enquiries, and non-notifiable transactions can all extend how long records must be retained, and penalties may apply if records are not kept long enough.

• For an LBTT return, records are normally kept until at least five years after the return was made, or five years from the amendment notice if the return was amended within the 12-month amendment period.
• Records must also be kept for longer if Revenue Scotland can still open an enquiry or if an enquiry has already started and not yet finished.
• For a non-notifiable land transaction, the same five-year approach applies, but the timing runs from the date a return would have been due if the transaction had been notifiable.
• For a claim made outside a return, records usually need to be kept for at least three years from the date of the claim, but this can be extended by enquiries or amendment enquiry windows.
• You should only dispose of records once the latest relevant date has passed, taking account of any amendment, enquiry, or earlier date specifically set by Revenue Scotland.
• Failing to keep the required LBTT records for long enough can lead to a penalty.

Scroll down for the full analysis.

How long LBTT records must be kept

This page explains how long records must be kept for Land and Buildings Transaction Tax (LBTT) purposes. The time limit is not simply a fixed number of years. It depends on what kind of LBTT document is involved, whether Revenue Scotland can still open an enquiry, and whether an enquiry is already under way.

What this rule is about

LBTT record-keeping rules matter because Revenue Scotland can ask to see records that support a return or claim. If the records are not kept for long enough, a penalty may apply. The rules are slightly different depending on whether the records relate to:

• an LBTT return, including a notifiable transaction,
• a non-notifiable land transaction where the buyer still has to retain supporting records, or
• a separate claim made outside an LBTT return.

The key point is that records must usually be kept until the later of a minimum time period and the end of Revenue Scotland’s enquiry window.

What the official source says

According to the Revenue Scotland guidance, a person who makes an LBTT return must keep and preserve the records required under section 74 of the Revenue Scotland and Tax Powers Act 2014 until the end of the later of two dates.

The first date is the “relevant day”. This is usually the fifth anniversary of the day the LBTT return was made. If the return is amended within the 12-month amendment period, it becomes the fifth anniversary of the day notice of the amendment is given under section 83 of the 2014 Act. Revenue Scotland may also specify an earlier day.

The second date is the point at which any enquiry into the return has been completed, or, if there is no enquiry, the point when Revenue Scotland no longer has the power to enquire into the return.

For a non-notifiable land transaction, the same approach applies, but the five-year period runs from the day by which a return would have had to be made if the transaction had been notifiable.

For claims made outside a return or amendment to a return under section 107 of the 2014 Act, a shorter retention period applies. The person must keep the records needed to make a correct and complete claim until the latest of:

• three years from the day the claim was made,
• if there is an enquiry into the claim or an amendment to it, the time when that enquiry is completed, or
• if the claim is amended and there is no enquiry into the amendment, the time when Revenue Scotland can no longer enquire into that amendment.

The source also states that failure to keep and preserve records as required can lead to a penalty.

What this means in practice

The practical effect is that you should not assume records can be destroyed as soon as five years or three years have passed. Those periods are only part of the test.

For LBTT returns, the normal starting point is five years. But if Revenue Scotland still has the power to enquire into the return, or has already opened an enquiry that has not yet finished, the records must be kept longer.

If a return is amended within the allowed 12-month amendment period, the five-year clock runs from the amendment notice, not from the original return date. That can extend the retention period significantly.

For non-notifiable transactions, the buyer still needs to think about record retention even though no return was filed. The timing is worked out by asking when the return would have been due if the transaction had been notifiable.

For stand-alone claims outside the return process, the minimum period is shorter at three years, but again that is only the minimum. An open enquiry or outstanding enquiry power can push the end date further out.

How to analyse it

A sensible way to work out the retention period is to ask these questions in order:

• Are the records connected with an LBTT return, a non-notifiable transaction, or a separate claim outside a return?
• If it is an LBTT return, when was the return made?
• Was the return amended within the 12-month amendment period, and if so, when was notice of that amendment given?
• If it is a non-notifiable transaction, by what date would a return have been due if one had been required?
• If it is a separate claim, on what date was the claim made?
• Has Revenue Scotland opened an enquiry into the return, claim, or amendment?
• If not, does Revenue Scotland still have the legal power to open one?
• Has Revenue Scotland specified an earlier day for retention in the particular case?

The records should only be disposed of once the latest relevant date has passed.

Example

Illustration: a buyer files an LBTT return on 1 June 2024. In the ordinary course, the five-year date would be 1 June 2029. If the return is amended within the permitted 12-month period and notice of the amendment is given on 1 February 2025, the five-year date moves to 1 February 2030. If Revenue Scotland opens an enquiry before then and the enquiry remains ongoing past that date, the records must still be kept until the enquiry is completed.

Illustration: a person makes a claim outside a return on 10 July 2024. The minimum retention period runs to 10 July 2027. But if there is an enquiry into the claim and that enquiry ends later than that date, the records must be kept until the enquiry finishes.

Why this can be difficult in practice

The difficulty is that the retention period is not always obvious from the transaction date alone. People often look only at the original filing date and overlook later events such as amendments or enquiries.

Another point that can cause confusion is the difference between:

• the minimum anniversary date, and
• the separate requirement to keep records while Revenue Scotland still has enquiry powers or an open enquiry.

Non-notifiable transactions can also be awkward because there is no actual return date to work from. Instead, the law uses the hypothetical date by which a return would have been due if the transaction had been notifiable.

The source material also refers to Revenue Scotland being able to specify an earlier day. Whether that has happened in a particular case will depend on the facts and any communication from Revenue Scotland.

Key takeaways

• For LBTT returns, records usually need to be kept for at least five years, but often longer if enquiry powers remain open or an enquiry is under way.
• If a return is amended within the allowed 12-month period, the five-year period runs from the amendment notice, not the original return date.
• Separate claims outside a return have a three-year minimum retention period, but enquiries and amendment enquiry windows can extend that period.

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Useful article? You may find it helpful to read the original guidance here: LBTT Record Keeping Requirements and Penalties for Non-Compliance Explained

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