Land and Buildings Transaction Tax (Scotland) Act 2013 section 10

Substantial performance without completion

Section 10 deals with what happens for LBTT purposes when a contract for a land transaction is substantially performed (for example, when the buyer takes possession or pays most of the consideration) before the formal conveyance completing the transaction has taken place.

• When a contract is substantially performed before formal completion, the contract itself is treated as the land transaction, and the effective date for LBTT purposes is the date of substantial performance, not the later completion date.
• If the contract is subsequently completed by a formal conveyance, both the earlier substantial performance and the later completion are notifiable transactions, but additional tax is only due on completion to the extent that the tax on completion exceeds the tax already charged on substantial performance.
• If the contract is later rescinded, annulled, or otherwise not carried into effect (in whole or in part), Revenue Scotland must repay the tax paid on substantial performance to the corresponding extent, provided a claim is made by amending the original land transaction return within the permitted time limit.
• Special rules apply where the transaction involves a lease — in that case, paragraph 25 of Schedule 19 applies instead of this section.

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