Guide on Tax Recovery Process and Obligations for Unpaid Group Relief

LBTT group relief: recovery of unpaid tax from someone other than the buyer

If LBTT becomes due because group relief is withdrawn and the buyer does not pay, Revenue Scotland may recover the unpaid tax from another person by serving a formal notice. That notice must meet strict legal requirements, has the effect of an assessment, and can also cover interest. A person who pays under the notice can then recover that amount from the acquiring company.

• Revenue Scotland must serve a formal notice on the other person before it can recover unpaid LBTT from them.
• The notice must state the amount due and require payment within 30 days of service.
• The notice must be served within 3 years from the date the tax was finally determined.
• Once served, the notice is treated like an assessment, so it has effect for recovery and appeal purposes.
• The notice can cover both the unpaid tax and any interest due on that tax.
• If the person served pays, they have a legal right to recover the tax and interest from the buyer.

Scroll down for the full analysis.

LBTT group relief: when unpaid tax can be recovered from someone other than the buyer

This page explains what happens if Land and Buildings Transaction Tax (LBTT) becomes payable after group relief is withdrawn, but the buyer does not pay it. In that situation, the legislation allows Revenue Scotland to recover the unpaid tax from certain other persons. The official material here deals with the notice that must be served, the time limit for doing so, and the legal effect of that notice.

What this rule is about

Group relief can reduce or remove LBTT on certain transfers within a corporate group. But if the relief is later withdrawn, tax that was not originally paid can become due.

The normal starting point is that the acquiring company, as buyer, is liable for the tax. This rule deals with a different question: what if that tax remains unpaid? The legislation allows recovery from another person in some cases. The source material does not set out here who those other persons are, but it explains the mechanism Revenue Scotland must use if it wants to recover the unpaid amount from them.

This matters because a person who was not the original buyer may still receive a formal notice requiring payment. If that happens, the notice is not just an informal demand. It is treated in law much like an assessment and can be enforced accordingly.

What the official source says

The official source says that, to recover unpaid tax from another person, a notice must be served on that person.

That notice:

• requires the unpaid tax to be paid within 30 days from service of the notice
• must be served within 3 years beginning with the date the tax was finally determined
• must state the amount of tax to be paid by the person served with the notice
• is treated as if it were an assessment and as if the tax were due from that person
• has effect not only for recovery of the tax and any interest on the unpaid tax, but also for appeal purposes

The source also states that if the person served with the notice pays the tax and interest, that person has a legal right to recover that amount from the acquiring company, meaning the buyer.

What this means in practice

If group relief is withdrawn and LBTT becomes payable, the buyer remains central. But where the tax is not paid, Revenue Scotland may shift collection to another person by serving a formal notice.

Several practical points follow from this.

First, the notice is essential. Revenue Scotland cannot simply assert that someone else is liable in the abstract. The legislation requires a notice to be served on the person from whom payment is sought.

Second, timing matters. The notice must be served within 3 years from the date the tax was finally determined. So the date of final determination becomes critical. If that time limit has expired, recovery from that other person may no longer be available under this mechanism.

Third, the notice must specify the amount payable. The person receiving it should be able to see exactly what sum is being claimed.

Fourth, once served, the notice has real legal force. It is treated as if it were an assessment and as if the tax were due from the recipient. That means the recipient is placed in a position broadly similar to a taxpayer who has been assessed directly, including for recovery and appeal purposes.

Fifth, interest can also be recovered. The notice is not limited to the underlying tax alone.

Finally, the legislation protects the person who ends up paying under this recovery route. If they pay the tax and interest, they are legally entitled to recover that amount from the acquiring company. In other words, the ultimate economic burden is intended to fall back on the buyer, even if Revenue Scotland collects from someone else first.

How to analyse it

If you are trying to understand whether this rule may apply, the key questions are:

• Has group relief been withdrawn so that LBTT has become payable?
• Is there unpaid tax following that withdrawal?
• Is Revenue Scotland seeking to recover that unpaid amount from someone other than the buyer?
• Has a formal notice been served on that person?
• Does the notice require payment within 30 days?
• Does it state the amount claimed?
• Was it served within 3 years from the date the tax was finally determined?
• Is interest also being claimed, and if so, on what basis?
• If payment is made by the person served, can that person in practice recover the amount from the acquiring company?

It is also important to distinguish between liability to Revenue Scotland and the right of reimbursement between private parties. Under this rule, the person served may have to pay Revenue Scotland first, then recover the amount from the buyer afterwards.

Example

Illustration: A company acquires property and claims group relief. Later, the relief is withdrawn and LBTT becomes payable. The buyer does not pay. Revenue Scotland then serves a notice on another person who falls within the recovery provisions. The notice states the amount due and requires payment within 30 days. If the notice was served within 3 years of the tax being finally determined, it can be used to recover the unpaid tax and interest from that person. If that person pays, they are legally entitled to recover what they paid from the acquiring company.

Why this can be difficult in practice

The source material is clear on the mechanics of the notice, but it is brief. In practice, several points may still require careful analysis.

One is identifying the date on which the tax was finally determined. That date controls the 3-year time limit, so it may be important to establish exactly when the tax position became final.

Another is identifying who falls within the class of persons from whom recovery may be sought. This page does not set out that underlying class. It only explains what must happen once Revenue Scotland seeks recovery from such a person.

A further practical issue is the distinction between public-law recovery and private reimbursement. The legislation gives the paying person a legal entitlement to recover from the buyer, but the ease of doing that may depend on the buyer’s solvency and the factual position between the parties.

There may also be appeal issues. Because the notice is treated as if it were an assessment and has effect for appeal purposes, the recipient should consider both the substance of the tax claim and whether the statutory conditions for the notice have been met.

Key takeaways

• If LBTT becomes payable after withdrawal of group relief and remains unpaid, Revenue Scotland may recover it from another person by serving a formal notice.
• The notice must require payment within 30 days, state the amount due, and be served within 3 years from the date the tax was finally determined.
• A person who pays under such a notice is legally entitled to recover that amount from the acquiring company.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Tax Recovery Process and Obligations for Unpaid Group Relief

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