In M Watts v Revenue Scotland [2017] FTSTC 1 the Scottish tax tribunal upheld penalties of £890 for a late LBTT return despite no tax being due; ignorance of the law was no excuse for the self-represented tax payer.

In Scotland a Land and Buildings Transaction (LBTT) return is required to disclose the purchase of all tangible property.

  • It must be filed within 30 days of the transaction.
  • A return is required whether there is tax to pay or not.
  • A return less than 3 months late triggers a penalty of £100.
  • If the return remains outstanding after 3 months penalties of £10 per day (up to 90 days) may be charged.

M Watts acted for herself in a land purchase and used the Revenue Scotland (RS) website to correctly assess her liability to LBTT tax at nil.

  • Her understanding was that a nil liability meant no return was required.
  • When she tried to register the purchase it was refused because no return had been filed.
  • When she filed the return she received two penalty notices; a £100 late filing penalty and £790 in daily £10 penalties because her return was more than 3 months late.
  • She appealed on the basis that the penalties were excessive given that no tax was due and that RS had deliberately not informed her once the return was 3 months late to ensure that daily penalties would accrue.
  • The first tier tribunal rejected her appeal; she did not have a reasonable excuse and the penalties had been levied within the law. They did however invite RS to use their powers to reduce penalties within the circumstances of s177 Revenue Scotland Tax Powers Act 2014 stating:

“It seems to us that the legislative existence of the power to impose daily penalties is intended to improve compliance. It is not evident that the power to impose a daily penalty will necessarily achieve that perfectly appropriate goal where a buyer genuinely believes that he or she is not required to make a return, however wrong that belief actually is.”


Not a UK decision and therefore not binding on the UK courts but the judge’s final comment (above) shows a certain degree of common sense. It is a shame that the court was not prepared to go a step further by ordering a reduction in penalties.


M Watts v Revenue Scotland [2017] FTSTC 1

Land and Buildings Transaction Tax