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Land and Buildings Transaction Tax (Scotland) Act 2013

Schedule 11 – Reconstruction relief and acquisition relief

238.This schedule, introduced by section 27, provides for relief from LBTT for land transactions connected to the transfer of the whole or part of an undertaking by a company where the consideration is non-redeemable shares. Relief from all LBTT due is provided if the transfer of the undertaking, including any land held by it, is under a scheme of reconstruction in exchange for non-redeemable shares (“Reconstruction relief”). A key condition is that shareholdings remain the same after the reconstruction. As with group relief, the reconstruction must be for a genuine commercial purpose and must not form part of any arrangement to avoid liability to tax (paragraphs 2 to 5).

239.Separately, under “Acquisition relief” (paragraphs 6 to 10), where a land transaction forms part of the transfer of an undertaking acquired for consideration of shares (but without the shareholdings having to remain the same), the amount of LBTT chargeable is reduced to a proportion (to be prescribed by the Scottish Ministers by order) of the tax that otherwise would be chargeable but for the relief. Orders will be subject to the negative procedure (see section 67).

240.Paragraphs 11 to 14 provide for withdrawal of this relief where control of the acquiring company changes within three years, beginning with the effective date of the transaction (or there are arrangements under which control will change after three years which are entered into within the three-year period).

241.Paragraphs 15 to 22 set out situations where reconstruction relief or acquisition relief is not withdrawn despite control of the acquiring company changing. They include:

  • where control changes as a result of a share transaction in connection with divorce, dissolution of a civil partnership or for similar reasons,

  • where control changes as a result of a share transaction in connection with transactions which vary dispositions following death,

  • where control changes as result of an exempt intra-group transfer of shares (defined in paragraph 36),

  • where control changes as a result of a transfer to another company to which share acquisition relief applies (defined in paragraph 34), and

  • where control changes as a result of a loan creditor becoming or ceasing to be treated as having control.

242.Paragraphs 23 to 29 provide for the withdrawal of reconstruction relief or acquisition relief on a subsequent non-exempt transfer and where share acquisition relief applies but control of the company subsequently changes. See also section 33 which requires there to be a further return to the Tax Authority where relief is withdrawn.

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