Land and Buildings Transaction Tax (Scotland) Act 2013 section Schedule 8 paragraph 5

Exception to relief where control of bond asset is acquired

Schedule 8 paragraph 5 sets out the circumstances in which the relief from LBTT for alternative finance investment bonds does not apply, specifically where a bond-holder or group of connected bond-holders acquires control of the underlying asset.

• The LBTT relief for alternative finance investment bonds (under paragraph 4) is withdrawn if control of the underlying asset passes to a single bond-holder or a group of connected bond-holders.
• Control is acquired when bond-holders have rights of management and control over the bond assets as part of their bond-holder rights.
• A bond-holder, or a group of connected bond-holders acting jointly, gains control when they acquire sufficient rights to exercise management and control of the bond assets to the exclusion of all other bond-holders.
• This provision prevents the relief from being used where the bond structure effectively gives one party, or a connected group, outright control over the property — a situation more akin to direct ownership than a genuine shared investment.