What are the qualifying conditions for LBTT acquisition relief under Schedule 11 paragraph 7?

Five conditions must all be met: the acquiring company must purchase the whole or part of the target's undertaking; consideration must include non-redeemable shares issued to the target or its shareholders; the acquirer must not be associated with arrangement parties; the undertaking must carry on a trade not mainly dealing in chargeable interests; and the acquisition must be for genuine commercial reasons without a tax avoidance purpose.

What type of consideration must be given for LBTT acquisition relief to apply?

The consideration for the acquisition must consist wholly or partly of non-redeemable shares in the acquiring company. Those shares must be issued either to the target company itself or to some or all of the target company's shareholders, ensuring the relief applies to genuine corporate acquisitions paid for with equity rather than purely cash transactions.

Why does the trading requirement exclude businesses dealing in chargeable interests?

The undertaking being acquired must carry on a trade that does not consist wholly or mainly of dealing in chargeable interests. This ensures the relief supports genuine business acquisitions rather than transfers of property portfolios dressed up as trading undertakings, preventing misuse of the relief for what are essentially land and property transactions.

What is the anti-avoidance purpose test for LBTT acquisition relief?

The acquisition must be effected for bona fide commercial reasons and must not form part of arrangements where a main purpose, or one of the main purposes, is the avoidance of LBTT. This standard anti-avoidance provision requires both a genuine commercial motivation and the absence of any tax avoidance motive for the relief to be available.

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

Qualifying conditions for acquisition relief

Paragraph 7 of Schedule 11 sets out the five conditions that must all be met for a land transaction to qualify for acquisition relief where one company acquires the undertaking of another.

An acquiring company must take over all or part of a target company's undertaking, with the consideration consisting wholly or partly of non-redeemable shares issued to the target company or its shareholders.
The acquiring company must not be associated with another company that is party to arrangements with the target company relating to the shares issued in connection with the transfer.
The main activity of the undertaking (or part) being acquired must be carrying on a trade that does not consist wholly or mainly of dealing in chargeable interests (essentially land and property transactions).
The acquisition must be carried out for genuine commercial reasons and must not form part of arrangements whose main purpose (or one of whose main purposes) is the avoidance of LBTT.

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