Land and Buildings Transaction Tax (Scotland) Act 2013 section 11

Contract providing for conveyance to third party

Section 11 deals with the LBTT treatment of arrangements where a contract for the transfer of land or buildings allows one party to direct that the property be conveyed to a third party rather than to themselves.

• Where a contract allows party B to direct party A to convey a chargeable interest to a third party (C), B is not treated as entering into a land transaction merely by entering into the contract — but if B substantially performs the contract, B is treated as acquiring a chargeable interest and a land transaction arises at that point.
• If the contract is later rescinded, annulled, or otherwise not carried into effect, any LBTT paid by B as a result of substantial performance can be reclaimed (in whole or in part) by amending the land transaction return, subject to the time limits in the Revenue Scotland and Tax Powers Act 2014.
• The normal rules on contracts and conveyances (sections 8 to 10) do not apply to the original contract between A and B — except where B directs A to convey the property back to B, in which case sections 8 to 10 apply to that obligation as if it were a standard contract for conveyance.
• Any separate contract between B and C for the onward transfer of the same chargeable interest is subject to the normal contract and conveyance rules (sections 8 to 10), and completion of such a contract includes the direct conveyance from A to C.

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