What definition of connected persons applies for Land and Buildings Transaction Tax purposes?

Section 58 of the LBTT Act imports the definition from section 1122 of the Corporation Tax Act 2010. This means individuals are connected with relatives including spouses, civil partners, siblings, ancestors and lineal descendants. Companies are connected with their controllers and other companies under common control, and partners are connected with fellow partners and their relatives.

Which LBTT provisions are affected by the connected persons rule under section 58?

The connected persons definition applies to section 14 on substantial performance of contracts, sections 22 and 23 on deemed market value rules for connected company transactions and their exceptions, and section 57 on linked transactions. It also applies to multiple schedules covering chargeable consideration, group relief, charities relief, sub-sale development relief, Green Freeports relief, partnerships and leases.

How does connected person status affect LBTT payable on property transfers between connected companies?

When property is transferred to a company connected with the seller, section 22 deems the chargeable consideration to be market value rather than the actual price paid. For example, a transfer at £1 nominal consideration would be taxed on the full market value. However, group relief under Schedule 4 may reduce or eliminate the charge if qualifying conditions are met.

Are there any modifications to the connected persons definition for LBTT partnership transactions?

Yes. While the general connected persons definition from the Corporation Tax Act 2010 applies to partnership transactions under Schedule 17 of the LBTT Act, it is subject to a specific modification set out in paragraph 49 of that schedule. This tailored rule reflects the particular nature of partnership transactions and adjusts the standard connected persons test accordingly.

Land and Buildings Transaction Tax (Scotland) Act 2013 section 58

Connected persons

Section 58 establishes how the concept of "connected persons" applies across various provisions of the LBTT legislation, by importing the definition from corporation tax law.

The definition of "connected persons" used throughout the LBTT legislation is taken from section 1122 of the Corporation Tax Act 2010.
This definition applies to key LBTT provisions including substantial performance of contracts, deemed market value rules for transactions involving connected companies, and linked transactions.
The connected persons test also applies to various schedules covering matters such as chargeable consideration, group relief, charities relief, sub-sale development relief, Green Freeports relief, partnerships, and leases.
For partnership transactions under Schedule 17, the connected persons definition applies but is subject to a specific modification set out in paragraph 49 of that schedule.

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