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'Businesses at risk of confusion over whether they are obliged to pay new tax', Law Society says

29 July 2014 | tagged News release

Businesses which operate under a licence to occupy, rather than a traditional lease, may find themselves confused as to whether they are liable for a new tax, under regulations being introduced by the Scottish Government, the Law Society of Scotland said today, July 29.

The Society was responding to a Scottish Government consultation, which proposes to make certain businesses operating under a licence liable for Land and Buildings Transaction Tax (LBTT), which is expected to apply to land transactions taking place from April 2015. Such licences are currently not liable for Stamp Duty Land Tax (SDLT).

Isobel d'Inverno, Convener of the Society's tax law committee said: "This is a landmark piece of legislation and it is imperative to get it right.  The draft regulations propose to make 'retail shops' operating under a licence to occupy liable for the new LBTT tax, but is not clear to us from the wording of the regulations what is meant by the term 'retail shop'.   Businesses operating under licences or concession agreements are currently not subject to SDLT, so the regulations implementing the new tax need to be clear and precise. For example, would it include cafes on trains, launderettes, or perfume counters in large stores?"

In its response the Society also highlighted the permanency of the buildings from where the shops trade, questioning whether or not businesses operating on a temporary basis such as catering tents at events such as festivals would fall within the remit of the regulations.

d'Inverno continued: "We believe that as drafted, the regulations imply a large degree of permanence and consequently outlets such as catering tents or pop up shops selling merchandise at sporting events would not be included, but this needs to be clarified.  As it stands, without further clarity on these regulations, professional advisors may be unable to advise their clients whether LBTT applies."



Notes to editors

The consultation document and the Law Society's full response can be found on the Society's website

FOR FURTHER INFORMATION: Please contact Louise Docherty on 0131 476 8204


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