Scottish Government to net 'Millions' in Property Tax Windfall

10 Dec 2012 | 08:59 am | 2 min. read

A little-noticed provision of the Scottish replacement for Stamp Duty Land Tax could create a significant windfall for the Scottish Government, according to lawyers

Commercial Property experts at international law firm Pinsent Masons say that the apparent decision to scrap 'sub sale relief' as part of‪ The Land and Buildings Transaction Tax (Scotland) Bill could cost the industry millions in the coming years while generating additional income for government.

Sub sale relief is a form of tax break typically applied where an organisation buys land and then sells it on in quick succession.

According Alan Cook, a Partner at Pinsent Masons, the application of this relief has been common practice throughout the UK for over 100 years.

He says, "There are numerous circumstances where an organisation might legitimately seek to acquire land and then move it on quickly. Developers will often agree to buy land and then sell-off discreet parcels for development by others, which can in turn speed up the overall exploitation of land.

"In those circumstances, where an organisation has never actually held the land, the SDLT was only applied to the ultimate purchaser. Under the new rules, the tax could be applied at multiple points in a complex property project.

"That will generate additional cost for the developers and inhibit economic development at a time when this is sorely needed."

The Scottish Government stated in the newly published guidance to the new legislation that the relief is being scrapped over fears it leads to tax avoidance. However, the UK Government has taken a different view in its regulations, accepting that there is solid commercial justification for subsale relief and instead proposing to reform how it works to minimise the possibility of tax avoidance.

Pinsent Masons says that George Osborne has previously indicated that if subsale relief was not available to businesses this would not simply be a measure to prevent tax avoidance, but would be new taxation on businesses and hence also on jobs and investment. 

Cook says, "There are undoubtedly circumstances where this relief is being abused and that should be addressed. However, while Westminster appears to think that scrapping the relief would be an inappropriately blunt approach to fixing the problem, Holyrood appears to have no such reservations.

"Why should restrictions be applied in the hope that they will inhibit tax avoiders, but which also exclude those who should legitimately benefit? The approach to tax avoidance should be effective enforcement, not the withdrawal of legitimate mechanisms. 

"Developers have to make choices about the locations where they will best deploy their financial resources, and there will be serious concerns that this could deter developers from directing those investments towards Scotland as it will offer a less competitive tax regime."

Cook says that it is impossible to give an accurate estimate of how much money the change will generate for government as there has been no way of tracking the occasions when the relief has been applied, but that it could easily run into the millions over coming years.

Latest press releases

Show me all press releases

Pinsent Masons advises Bodymed AG on the sale to Nestlé Health Science

The multinational law firm Pinsent Masons advises the holding company of the founder Dr Hardy Walle on the sale of all shares of Bodymed AG to Nestlé Health Science.

Pinsent Masons secures 11th place in Financial Times Diversity Leaders 2021 Report

Multinational law firm Pinsent Masons has been named as a top 20 Diversity Leader by the Financial Times, ranked 11th in its Diversity Leaders 2021 report.

Pinsent Masons advises shareholders of Goodtill on its sale to SumUp

Multinational law firm Pinsent Masons has advised the shareholders of Goodtill on its sale to SumUp

People who viewed this press release also viewed

Show me all press releases

Pinsent Masons rolls out the Mindful Business Charter in the Middle East to promote mental health and wellbeing

Pinsent Masons has rolled out its Mindful Business Charter across its business in the Middle East. It adopts and promotes a culture of openness about mental wellbeing and encourages working arrangements that will reduce the unnecessary causes of stress and pressure in the workplace thereby ensuring higher team performances.

Pinsent Masons advises major student accommodation project at Kingston University

Pinsent Masons has advised Kingston Student Living LLP (an Equitix/Engie consortium) on the Kingston University Residences DBFO project, which has reached Financial Close.

Pinsent Masons wins at the Legal Week British Legal Awards

Multinational professional services business Pinsent Masons has won a hat-trick of awards at the Legal Week British Legal Awards in London.

For all media enquiries, including arranging an interview with one of our spokespeople, please contact the press office on

+44 (0)20 7418 8199 or 

Location contacts