Revenue Scotland have published a Land and Buildings Transaction Tax (LBTT) key operational update  for agents and other tax professionals dealing with the submission of LBTT returns. 

The update sets out Revenue Scotland's approach to dealing with compliance issues during the Covid period, and  contains some important information about penalties and three yearly lease returns and other Revenue Scotland practices. 

No penalties for three yearly lease returns submitted late during Covid

Revenue Scotland have confirmed that where a three yearly lease review return which was due during the Covid period (between 23 March 2020 – 31 August 2021) has been submitted late, no penalties will be charged and any penalty notice already issued will be reduced to zero.  Taxpayers and their agents should check the position and ask for penalties to be refunded where appropriate. 

Taxpayers who have still to submit returns which were due during that period should do so as soon as possible. Where a penalty notice has been issued during the Covid period where the return has not yet been submitted, the taxpayer has 92 days from the date of any penalty notice to submit the return to avoid the penalty being charged.  

Other penalties for late LBTT returns and late payment

The above treatment does not apply to penalties relating to other LBTT returns, including LBTT returns on the grant of a lease or the purchase of land, however taxpayers can seek a review of the penalty within 30 days. If taxpayers have been affected by Covid they or their agents can submit details to explaining how Covid affected the late submission of the return or the late payment of LBTT.  

In our experience Revenue Scotland consider submissions by taxpayers in relation to late payment or late returns very carefully, and penalties are reduced in many cases.  When requesting a review of a penalty it is important to bear in mind that it is the impact of Covid on the taxpayer, and not on the agent, which is relevant for the purposes of Revenue Scotland's review. 

Taxpayers in financial difficulties 

Taxpayers experiencing financial difficulties should contact Revenue Scotland as soon as possible to discuss possible options. This could include a Payment Promise (where the taxpayer agrees to make payment in full at a future date) or a Time to Pay arrangement, where tax is paid in instalments over a period of time. For further information see Difficulties paying your tax bill on time.  We have successfully negotiated Time to Pay arrangements in a number of situations due to cash flow constraints arising due to both Covid and other issues. 

Agents to receive details of penalty notices through SETS

Late filing and late payment penalty notices are issued to taxpayers in writing. Agents no longer receive a copy of penalty notices but are notified of the penalty via a message within the Scottish Electronic Tax System (SETS). Agents should check the "All Transactions" section of the dashboard in SETS for notification that a penalty notice has been issued to their clients. 

Digital by default

Revenue Scotland no longer accept paper LBTT returns or payments by cheque, but they will discuss submission and payment option for those requiring enhanced support. 


Isobel d'Inverno

Director of Corporate Tax