Revenue Scotland have recently issued updates on penalty notices and when debt is treated as consideration for LBTT purposes.

Penalty notices

Revenue Scotland have announced a change of practice in that the agent's copy of penalty notices will no longer be issued by post, and instead will be sent through the secure messaging system of the LBTT online tax return submission system, SETS. Penalty notices will continue to be sent by post to taxpayers. Revenue Scotland are developing some guidance to help SETS users tailor the messaging system so that SETS messages are delivered to the most appropriate person.

Debt as consideration

As of 8 June 2021, Revenue Scotland have updated their guidance on when the assumption of debt is treated as consideration in a land transaction. In the case of unsecured debt, debt will only be treated as assumed in cases where:

  • there is an agreement between two or more people whereby one or more of them agree to be liable for an existing debt when they were not previously liable for it;
  • one party indemnifies another for any liability the other party has in relation to a debt.

    This is a welcome clarification by Revenue Scotland which restricts the cases where unsecured debt is consideration to those cases where there is a specific agreement to assume or indemnify in respect of the debt.

    The new guidance can be found in Revenue Scotland's online guidance at LBTT2003 - Debt as consideration in updated examples 

    Example 35A: Individual acquiring a half share of a dwelling with a new mortgage

    Example 35B: Individual acquiring a half share of a dwelling and assuming existing mortgage debt

    Example 35C: Individual acquiring the remaining share of a dwelling and assuming existing mortgage debt


    Isobel d'Inverno

    Director of Corporate Tax