Land and Buildings Transaction Tax (Scotland) Act 2013 section 14

Meaning of "substantial performance"

Section 14 defines what it means for a contract to be "substantially performed", which is important because substantial performance can trigger a liability to Land and Buildings Transaction Tax even before a formal conveyance takes place.

• A contract is substantially performed when the buyer (or a connected person) takes possession of all or substantially all of the property, when a substantial amount of the consideration is paid, or when the contract is assigned or transferred so that someone other than the original buyer becomes entitled to receive the conveyance.
• Taking possession includes receiving rent or acquiring the right to receive rent, and it does not matter whether possession is taken under the contract itself or under a separate licence arrangement.
• What counts as a "substantial amount" of consideration depends on the type of consideration: where there is no rent element, substantially all the price must have been paid; where the only consideration is rent, the first rental payment triggers substantial performance; and where both rent and other consideration are involved, either paying substantially all of the non-rent element or making the first rent payment is sufficient.
• The assignation, subsale or other transaction trigger also covers situations where an option is granted or assigned in relation to the property.