October 30, 2026
SDLT, LTT and LBTT
A recent Scottish tax case provides an interesting illustration of the practical difficulties that can arise when the position adopted by a tax authority differs from that reached by a tribunal.
The issue originates with Archer (UK) Limited v Revenue Scotland, concerning the Land and Buildings Transaction Tax (LBTT) treatment of transitional leases – leases over Scottish land which were granted before LBTT replaced Stamp Duty Land Tax (SDLT) in Scotland on 1 April 2015 and were subsequently extended.
Transitional provisions were introduced to bring certain extensions of these leases within the LBTT regime. Article 13 of the Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014 seeks to treat an extension as the grant of a new lease for LBTT purposes where it would have constituted the grant of a new lease for SDLT purposes.
In Archer, however, the First-tier Tribunal for Scotland Tax Chamber concluded that the provision did not operate as intended. The extension would not have amounted to the grant of a new lease for SDLT purposes and, consequently, was not treated as a new grant for LBTT. The Tribunal also found that the drafting could not simply be corrected by reading additional wording into the legislation.
Revenue Scotland disagreed with the decision and appealed to the Upper Tribunal. In the meantime, it has continued to apply its existing interpretation and treat extensions of transitional leases as the grant of new leases subject to LBTT.
This creates an unusual practical problem. Although LBTT is a self-assessed tax, registration of relevant deeds may depend upon the required return having been filed and the tax paid. Taxpayers can therefore find themselves having to decide whether to follow the First-tier Tribunal’s interpretation of the legislation or Revenue Scotland’s continuing published position while the appeal remains unresolved.
The consequences of that uncertainty have now surfaced in Scoopz Ltd v Revenue Scotland.
Scoopz was the tenant of an Edinburgh office under a lease granted before 2015. In August 2025, it agreed an extension of the lease. The company subsequently contacted Revenue Scotland after experiencing difficulties filing its return online and submitted a paper return, believing that the filing obligation arose when the extended period commenced.
Revenue Scotland ultimately accepted the tax calculation but issued Scoopz with a late-filing penalty.
The difficulty is that the underlying question of whether a return was required at all remains dependent upon the outcome of Archer. The First-tier Tribunal has therefore sisted – or paused – the penalties proceedings until the Archer litigation, including any further appeals, has been resolved.
If Archer is upheld, the tax was not due on the basis considered by the Tribunal. The logical consequence would also be that there was no obligation to file an LBTT return and therefore no basis for a late-filing penalty.
If Archer is overturned, however, taxpayers who have relied upon the First-tier Tribunal’s decision may face the opposite problem: transactions which they believed fell outside LBTT may need to be reported, potentially bringing questions of late filing, penalties and interest into play.
There is a further complication for taxpayers who have already paid LBTT while the legal position remains uncertain.
Ordinarily, a taxpayer may amend an LBTT return within the statutory amendment period and seek repayment where tax has been overpaid. Once that period has expired, recovery may instead depend upon an overpayment relief claim, which operates differently and may be subject to additional restrictions.
This creates a practical question for advisers dealing with affected transactions now: whether protective action should be considered while the Archer appeal remains outstanding, rather than waiting for a final decision and potentially finding that an amendment window has already closed.
The wider point is an important one for tax advisers and solicitors alike. HMRC or Revenue Scotland guidance is an important indication of a tax authority’s interpretation, but guidance is not legislation and does not determine the law. Where the statutory wording is unclear, or its interpretation is already before the courts or tribunals, the underlying legislation and relevant case law may point to a different conclusion.
Archer and Scoopz demonstrate the difficult position this can create in practice: taxpayers may need to make real-world decisions about filing, payment and registration before the courts have provided a definitive answer on what the legislation actually requires.
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