Scoopz Ltd v Revenue Scotland

An illustration of the kinds of practical issues that flow from the current situation with the First-tier Tribunal for Scotland Tax Chamber (FTSTC) decision in Archer, this case shows the kind of difficulties which are being stored up for later.

In Scoopz, Revenue Scotland attempted to charge late filing penalties to a self-represented taxpayer who had failed to file a return for a lease extension which – according to the Archer decision – was not due.

Background – Archer (UK) Limited v Revenue Scotland

If you’re reading a blog on Scottish taxes then you will probably be aware of last years’ decision in Archer v Revenue Scotland, and the kinds of practical (and legal!) issues it throws up. You will also be aware that an appeal has been heard at the Upper Tier Tribunal, from which a decision is expected at some point this year.

In case you aren’t aware, here’s a quick summary:

Archer is a case about transitional leases – that is, leases over land in Scotland granted before the introduction of Land and Buildings Transaction Tax (LBTT) on 1 April 2015 and then extended after that date.

Since Stamp Duty Land Tax (SDLT) no longer applies to such leases, and the normal LBTT leases rules wouldn’t catch such an extension, transitional rules were needed to “bring” extensions of transitional leases “into LBTT”. The relevant rule in Archer is article 13 of the Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014, which purports to deem such an extension to be the grant of a new lease for LBTT purposes, if it would have been the grant of a new lease for SDLT purposes.

In Archer the First Tier Scottish Tax Chamber (FTSTC) held that:

the drafting of Artical 13 didn’t work as intended and couldn’t be easily fixed by the FTSTC (e.g., by applying the Inco principle to read wording that would fix the provision). The extension would not have been the grant of a new lease under SDLT, so the extension of the lease was not a new grant under LBTT – and therefore was effectively out of scope of LBTT;
if the extension was a new lease, then Revenue Scotland were incorrect about the start date of that new lease, which should run from when the extension was signed – not from when the old lease ended.

An FTSTC decision is only binding in respect of the actual dispute litigated, Revenue Scotland are not bound to follow it more generally. As they are entitled to do, Revenue Scotland disagreed with the decision, sought an appeal and stated that they will continue to treat extensions of transitional leases as the grant of new leases (and therefore subject to LBTT).

Cards on the table

Just to be clear – and for reasons too long for this note – my own view is that the FTSTC is probably wrong on the first issue. I think there is a better legal analysis than that in the decision which points to Article 13 working (albeit imperfectly) to bring transitional lease extensions into LBTT. I have no idea whether the Upper Tier Tribunal (UTT) will take that view (having sat in on the hearing, the argument I would make was not pled in proceedings, and it’s the kind of argument of which I suspect the Scottish bench is not that fond). But I do have some sympathy with Revenue Scotland’s stance on the technical aspects of the case.

Archer practical issues

This leaves taxpayers, advisors and others between a rock and a hard place. There is a complex legal issue (and the legal issues in Archer ARE complicated and interesting) in which the tax authority and the courts have differing stances. Short of government legislation to fix the issue, the tension will only be resolved once there is a binding decision from the Upper Tier Tribunal (UTT) or indeed further up the Court system. In the meantime, tenants and landlords are left juggling the following issues.

Registration
Recovering the tax
Compliance
Need for protective action
Penalties & interest

Registration

Under s43 of the LBTT Act, the Keeper cannot accept for registration in the land register or General Register of Sasines (GRS) any deed or document unless any LBTT due has been paid and any required LBTT return filed. The Keeper has quite reasonably stated that they will be following Revenue Scotland guidance on transitional leases and has rejected applications to register extensions of leases where parties have sought to rely on Archer to pay no tax.

Although LBTT is a self-assessed tax, where an extension legally requires to be registered, this amounts to an effective legal obligation to pay tax which is contested.
Even if there’s no legal obligation to register, the landlord on many leases will likely still expect or require registration under the terms of the extension agreement – so this puts the parties at loggerheads.

Recovering the tax

If a tenant does pay tax on an extension to facilitate registration, how do they get their money back if the UTT upholds Archer on either issue?

If the relevant date of the extension falls less than a year before the UTT decision comes out, then taxpayers can lodge an amendment to the relevant tax returns and seek repayment unilaterally. There are formalities that need to be observed – but the taxpayer is entitled to amend their return. If Revenue Scotland do not want to pay out on an amendment,then they need to launch a formal enquiry to challenge it. It is hard to see what sensible prospect they would have of resisting an amendment backed by a UTT decision.
But if the extension was reported more than a year before the UTT decision is released, amendments can be timed out. In such cases, the taxpayer can only recover their tax using “overpayment relief”. This is not unilateral: the relief must be granted by Revenue Scotland, and they have the power to refuse it in certain circumstances. One such circumstance is where the tax was paid in accordance with “practice generally prevailing”. Given some of the arguments raised in the FTSTC, it is easy to imagine Revenue Scotland trying to raise that argument.
The better approach is therefore to file a protective amendment when the return is made seeking to void the return but also recalculate the tax in accordance with the FTSTC’s decision on the lease start date. Revenue Scotland should be invited to enquire into the amendment (meaning they don’t need to pay out now) but to pause that enquiry pending the outcome of the UTT case. This, if Revenue Scotland agree to the enquiry, should “lock in” the ability to rely on the amendment process to recover.

Compliance

If taxpayers do not file returns and the UTT overturns the FTSTC decision, then Revenue Scotland have a compliance nightmare on their hands. There is no apparent way for them to identify unreported lease extensions which should have been taxed, and taxpayers who have been advised to not pay following Archer are unlikely to be refreshing the Scottish tribunal website waiting for the UTT decision to drop. Most likely they will be reliant on their advisors reaching out to inform them that, actually, they were due to pay some tax after all. The risk is of a “compliance gap” where a tranche of taxable transactions go unreported and remain so.

Need for protective action

Please make sure the retrospectroscope is warm: conversely, if the UTT upholds the FTSTC decision then the Scottish Government will probably have to intervene. If they do not then the LBTT regime has a massive loophole built in: leases granted before 1 April 2015 can be extended tax free. The obvious answer is to legislate to amend article 13 – but this raises tricky questions about whether the amendment should have retrospective effect. If it doesn’t then there are obvious issues around fairness, and a potential rush to extend leases before the new legislation bites. If it does have retrospective effect, then we have a similar compliance issue to that above. There is also the uncomfortable question about passing retrospective legislation to impose a charging provision – and whether the fact of the clear error in execution is sufficient justification.

Penalties & interest

Finally, if the UTT overturns Archer and conscientious tenants submit a flurry of late returns, should they be penalised or not? It is tempting to say “no”. That seems like the (*sounds of Scottish lawyer choking on their words*) equitable position to take. But the statutory pathway to forgiving late filing penalties is not a straight one.

Revenue Scotland has the power to reduce late filing and payment penalties where there are special circumstances – and one would think the Archer interregnum ought to qualify as such. Given the stance taken in guidance, it is not clear that Revenue Scotland agree – but overreliance on their guidance here would in my view be overreach. Guidance isn’t law, and right now the most authoritative statement of the law goes against them. In any event, such a reduction is at Revenue Scotland’s discretion and may not be volunteered.
Penalties can be reduced in cases where sufficient facts are disclosed to Revenue Scotland to enable them to properly assess the tax due. Would making a return for an Archer case count as a disclosure?
Penalties do not apply where the taxpayer has a reasonable excuse (a concept not defined in legislation, but one which is heavily litigated) or where they have taken reasonable care in relying on a third party. The problem here is that reasonable excuse arguments are very fact and taxpayer specific: it depends on what the actual taxpayer did and whether that was reasonable or not. It is not – as commonly understood – a blanket provision. Again, it is not clear whether Revenue Scotland would accept a reasonable excuse argument if, for example, they choose to place excessive weight on their current guidance (and contacts have shared enquiry letters with me which suggest that they might). Unlike a special circumstances reduction, this is something which taxpayers could more readily litigate in the FTSTC – but that comes with a high cost.
Unlike penalties, there is no statutory off switch for late payment interest. So without on point legislation, taxpayers who relied on the FTSTC decision to not file returns on transitional leases would still be subject to late payment interest if the UTT overturns the original decision. And late payment interest is at a rate which would make mortgage lenders blush.

The fact pattern and approach in Scoopz are deeply unfortunate.

Scoopz were tenants under a pre 2015 lease of an Edinburgh office. On 20 August 2025 they agreed an extension of that lease – if Revenue Scotland’s position on Archer is correct, that extension appears to trigger LBTT of £864. Scoopz contacted Revenue Scotland directly in February 2026 as they were unable to register with the online SETS system to file a return. They were advised to submit a paper return instead, which they did the next day. Scoopz explained when submitting the paper return that they thought the return was due in March 2026 to coincide with the commencement of the period of extension. (In my view this is a very forgivable error for an unrepresented taxpayer – most lease extension minutes refer to the “effective date” of the extension as the date after the old lease ends. This is of course not a reference to the LBTT effective date, but it’s hard to fault a lay taxpayer for this; I’ve seen plenty of lawyers make the same mistake). Revenue Scotland queried the tax assessed in the paper return, but ultimately accepted that the taxpayer had it right. They then issued a late filing penalty.

It appears from the case report that Scoopz were not aware, nor were they told by the Revenue, about the FTSTC decision in Archer,nor the UTT appeal. Instead, Revenue Scotland sought to argue that a return ought to have been filed on the strength of their existing guidance.

The key parts of the FTSTC’s decision are:

They sisted the penalties dispute – i.e., it has been left pending until the UTT decision is released (and indeed all other appeal possibilities are exhausted).
They have stated that unless and until Archer is overturned by a higher court, they will continue to apply their earlier decision in the FTSTC.
If the UTT uphold Archer, then the tax was never due (para 20 of the decision). While not explicitly stated, the logical consequence is that there was no filing obligation and therefore no basis to charge a penalty.
If the UTT overturn Archer, then the penalties question is a legitimate one.
The FTSTC also state that the UTT may uphold on the second issue only – which cuts to how the tax is calculated. They helpfully flag to the taxpayer that they may be able to recover some overpaid tax in that instance, but flag that amendments must be made within a 12 month time limit.

Observations

The Scoopz decision highlights several practical and procedural concerns arising from the continued uncertainty around Archer. It also raises important questions about Revenue Scotland’s approach and the steps taxpayers may need to take to protect their position.

The FTSTC’s criticism of Revenue Scotland

Firstly, on the main points the FTSTC is absolutely in the right here. And their criticism of Revenue Scotland is fair and merited. The failure to flag to a self-represented taxpayer the implications of Archer, and the current uncertainty is plainly unfair conduct – irrespective of whether they are obligated to do so. They are also right to push back on Revenue Scotland’s attempt to rest the point on their guidance. This would be, in my view, an implausible position for Revenue Scotland to pursue.
The amendment window has closed

Second, the FTSTC is wrong to flag amendment here – and this is an unfortunate point. If the relevant minute of extension was signed on 20 August 2025, then the statutory filing date was 19 September 2025. The amendment window runs from 12 months from that filing date or such other date as the Scottish Ministers may prescribe. So, short of secondary legislation, the amendment window is now closed. This means that if the UTT uphold either leg of Archer Scoopz’s only viable approach is a claim for overpayment relief – on which see above.
The risk of an unfair tax outcome

Third, one can see an unfair outcome in the wings. If the UTT do uphold Archer, the penalties must fall away, but Revenue Scotland could attempt to argue that the tax cannot be recovered because overpayment relief need not be granted – for example, under the practice generally prevailing exception. This really would be absurd, to the point of abhorrence – the penalties are not due, because there was no tax liability… but Revenue Scotland still get to keep the tax (or try to).
Other taxpayers facing penalties

Fourth, one wonders how many other taxpayers are currently facing penalties over Archer scenarios? Will Revenue Scotland agree to pause any existing penalty assessments until the UTT decision is released? This would, in my view, be the appropriate course of action.
Revenue Scotland’s decision to pursue the case

Fifth, it’s incredibly surprising that Revenue Scotland have sought to litigate this. Like Bagshaw, they could have saved a lot of face by conceding or indeed seeking themselves to sist. And the legislation offers them three branches for a dignified climb down – reasonable excuse, reductions for disclosure (which the taxpayer arguably did and appears to have been wholly upfront with Revenue Scotland), and special circumstances. None of which were taken. Pursuing a case like this is what happens when your decision tree is a stump.
What any legislative fix should address

Sixth, none of this covers the scenario where the Scottish Government do legislate to “fix Archer”. While there are a number of permutations on what the legislation could be – serious consideration should be given in any legislative fix to ensuring that taxpayers who have reasonably sought to rely on Archer are not unduly penalised. A window for suspending penalties (to allow for a compliance catch up), an exemption from statutory interest and a possible reset of the 12 month amendment window (to prevent arguments about overpayment relief if the fix is not retrospective) should all be entertained as serious possibilities in the interest of fairness. The fact that the current uncertainty has persisted for close to 18 months is pretty damning: it would be good to see an intervention from the Scottish Government (and if the UTT upholds the FTSTC decision, it will probably be essential) but it does beg the question why they haven’t legislated for the issue already.
Protective action for taxpayers

Finally, for taxpayers who have paid tax on a transitional lease – if you have the time, make sure you submit a protective amendment if you haven’t done so already. If Scoopz is any indication of how Revenue Scotland intend to deal with Archer cases, taxpayers who have paid the tax on the strength of guidance, or to facilitate registration should take all the precautions they can.