When does paragraph 27 of Schedule 11 LBTT(S)A 2013 apply?

Paragraph 27 applies where a company's control changes and, at that time, the company still holds shares that were originally transferred to it under the arrangement described in paragraph 25(a) of Schedule 11. If those shares or any shares derived from them are held at the point of the control change, the clawback provisions are triggered.

What is the purpose of the group relief clawback under paragraph 27 Schedule 11?

The purpose is to prevent group relief from being preserved where shares are transferred within a group and the receiving company subsequently leaves the group through a change of control while still holding those shares. It ensures LBTT becomes payable on the original land transaction if these conditions are met.

Does paragraph 27 only apply to the original transferred shares?

No. Paragraph 27 also applies to any shares that have been derived from the originally transferred shares, for example through a share reorganisation, conversion, or exchange. This prevents avoidance by restructuring shareholdings so the company could argue it no longer holds the same shares.

What happens if paragraph 27 is triggered and group relief is clawed back?

If the conditions in paragraph 27 are met, the group relief previously claimed on the original land and buildings transaction is withdrawn. This means LBTT becomes due on that original transaction as though group relief had never been granted, and the taxpayer must account for the tax accordingly.

Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 11 paragraph 27

Condition for clawback where a company holds transferred shares at the time control changes

Paragraph 27 of Schedule 11 sets out when the clawback provisions apply in relation to shares held by a company at the point its control changes hands.

This paragraph applies where a company's control changes and it still holds shares that were originally transferred to it
The shares in question are those transferred as part of the transaction referred to in paragraph 25(a) of Schedule 11
The paragraph also catches any shares that have been derived from those originally transferred shares (for example, through a share reorganisation or exchange)
If these conditions are met, the group relief previously claimed on the original land transaction may be clawed back

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