In Abbotsford Property Group Limited & Anor v Revenue Scotland [2025] FTSTC 9, the First Tier Tribunal (FTT) for Scotland upheld assessments and penalty notices for Land and Buildings Transaction Tax (LBTT) due to the carelessness of the tax adviser, both in providing inaccurate advice and failing to disclose in a timely way.
Commencing March 2016, the sole shareholder in a group’s parent company sought advice from his accountants about how to restructure the group for succession planning, without losing any group tax reliefs.
- On 16 January 2017 and 5 April 2017, new shell companies became 100% subsidiaries of the parent. These were renamed Mount Royal Property Group Ltd (Mount Royal) and Abbotsford Property Group Limited (Abbotsford).
On 21 April 2017, Mount Royal purchased a property from another company in the group.
- A Land and Buildings Transaction Tax (LBTT) return was filed by the taxpayer’s solicitor on 24 April 2017, claiming group relief.
On 31 May 2017, Abbotsford purchased a property from another company in the group. On the same day, the share capital of both companies was subdivided, and new shares were allotted to other individuals.
- The holding company was left with 50% of the share capital of each company. Group relief relied on them being at least 75% subsidiaries.
- As this change happened within three years of both land transactions, the companies were no longer eligible for group relief.
On 3 August 2018, the taxpayer’s solicitor filed the LBTT return late following discussions with HMRC over a VAT Option to Tax.
- Lack of eligibility for group relief was missed and relief was claimed.
- Penalties were levied and paid due to the return being late.
In late 2020, a concern was raised internally by the accountants that the group relief should not have been available.
- An internal investigation was conducted, and the company accounts were filed as late as possible in January 2021 to allow time for senior tax counsel to advise on the matter.
In a letter dated 3 March 2021, the accountants told Revenue Scotland that there “may” have been LBTT underpayments in earlier years due to incorrect group relief claims, and they were consulting legal counsel.
- Revenue Scotland replied on 4 March 2021 and again on 15 April 2021, requesting basic information but took no further action.
On 23 February 2022, revised LBTT returns were submitted showing the LBTT due with no claims for group relief.
- The accountants sent a voluntary disclosure letter on 25 February 2022, confirming that the group relief claims were incorrect and why.
- On 3 March 2022, Revenue Scotland replied that returns can only be amended within 12 months of the filing date. Of the legislative options available, they proposed issuing section 98 Revenue Scotland and Tax Powers Act (RSTPA) assessments to amend the original returns.
In April 2022, Revenue Scotland issued section 98 RSTPA assessments to each company for LBTT and interest.
- The assessments were based on the taxpayers, or someone acting on their behalf, acting carelessly in claiming group relief, and/or failing to withdraw the claim within a reasonable time once the relief was no longer available.
- In May 2022, the accountants requested a Review. They argued they were simply an adviser and did not act on behalf of the taxpayers. They also argued that Revenue Scotland had known about the issue since March 2021, and the onus was on them to open an enquiry.
- Revenue Scotland upheld the assessments on 3 March 2023.
On 22 February 2023, Revenue Scotland issued penalty notices for failing to make further returns and pay tax in line with the requirements of section 33 Land and Buildings Transaction Tax Act (LBTTA).
- On 22 March 2023, the accountants requested a review.
- On 2 June 2023, Revenue Scotland concluded its reviews. The review gave a 10% reduction for the taxpayers’ disclosure but otherwise upheld the penalties.
- The taxpayers Appealed to the FTT for Scotland.
The FTT for Scotland found that:
- The assessments were validly made and within the required timeframe.
- The accountants were open in admitting it was their failures that led to the loss of group relief.
- The accountants gave instructions and not just advice in dealing with the solicitors on the taxpayer’s behalf. They were therefore acting on the taxpayers’ behalf.
- The onus was on the taxpayer to rectify the issue, not Revenue Scotland.
- The delays in informing Revenue Scotland were not reasonable, as they were primarily caused by the accountant’s concern for finding a way to undo the effects of their mistake.
- The late filing and payment penalties for Abbotsford were not due.
- The share allocation and the property transaction taking place on the same day meant that group relief was never available. Since group relief was not withdrawn, there was no requirement to submit a further return (even though one was submitted).
- The late filing and payment penalties were due for Mount Royal.
- Group relief was available on the date of the transaction and the date the LBTT return was filed. Since the intention was that the later share allocations would be done in a way to maintain group status, no arrangement was in place that might otherwise have denied the relief. A further return was required under section 33 LBTTA.
- Although the maximum reduction for disclosure was requested, the 10% reduction was determined to be fair. The disclosure was inadequate and later than it should have been. There were also time delays in answering questions.
- The further return and payment of tax was required by 30 June 2017, 30 days from the group relief no longer being available. The penalties were correctly calculated from this date.
- There was no reasonable excuse for cancelling the penalties. Reliance on an incompetent adviser does not amount to a reasonable excuse. Nor was the accountant’s negligence a special circumstance.
The appeal against the assessments for both companies and the penalties for Mount Royal was denied. The appeal against penalties for Abbotsford was allowed.
Useful guides on this topic
LBTT: Land and Buildings Transaction Tax
What is Land and Buildings Transaction Tax (LBTT)? What are the rules?
Opting to tax land and property
What is an option to tax? What do I need to do to opt to tax? What happens if I buy an opted property?
Statutory Review by Revenue Scotland
What is a Statutory Review? What is an appealable decision? How do I request a review? What is the review process?
Client guide: Reasonable care and tax penalties
What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?
External link
Abbotsford Property Group Limited & Anor v Revenue Scotland [2025] FTSTC 9