Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 7 paragraph 11

Treatment of the buy-back agreement in common ownership arrangements

Schedule 7 paragraph 11 deals with how the buy-back agreement in an alternative property finance common ownership arrangement is treated for LBTT purposes, ensuring it does not trigger tax charges prematurely.

• In a common ownership alternative finance arrangement, the person and the financial institution agree that the institution will eventually transfer its share of the property back to the person.
• This buy-back agreement is not treated as substantially performed until the institution's entire interest in the property has actually been transferred back — the normal rules on substantial performance do not apply to it.
• The buy-back agreement is also not treated as a separate land transaction in its own right under the rules that normally apply to options and rights of pre-emption.
• These provisions prevent the buy-back agreement from giving rise to an LBTT charge at the point the agreement is entered into or at any intermediate stage before the full transfer is completed.

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