The proposals have been brought forward in response to lobbying from the Scottish property and investment management sectors, who have warned that a lack of similar reliefs to those that already exist for stamp duty land tax (SDLT) in England "may lead investment and pension funds to divest of Scottish properties". LBTT replaced SDLT in Scotland on 1 April 2015.
The Scottish government said that it wanted to "gain a better understanding of the future impacts of not having these reliefs, or alternatively, the impacts should they be introduced". It is particularly seeking views on the potential that the new reliefs could encourage tax avoidance, as well as the link between the types of fund targeted by the proposals and real economic growth.
The consultation, which runs for 12 weeks, closes on 2 August 2018.
The Scottish government has proposed the introduction of two new reliefs: the first for the 'seeding', or initial transfer, of property assets into an open-ended investment company (OEIC) or co-ownership authorised contractual scheme (CoACS); and the second for when units in CoACS are traded. A relief applicable when properties held by authorised unit trusts are converted or amalgamated to an OEIC was introduced by the Scottish government with effect from 6 October 2015, following consultation.
The consultation repeatedly states that the proposals will introduce "parity" between the relative LBTT and SDLT positions. However, the Scottish government has the opportunity to tailor the relief to address criticisms previously raised south of the border, according to property expert Alan Cook of Pinsent Masons, the law firm behind Out-Law.com.
"The property industry has been lobbying for some time for this relief to be introduced into LBTT, and this consultation is a welcome step," he said.
"It is not necessarily the case that any relief introduced into LBTT will be precisely the same as the existing equivalent SDLT relief, where for example issues have been raised about the negative impact of clawback provisions on the practical take-up of the relief, and the Scottish government will be keen to frame any LBTT relief in optimal terms from the start," he said.
"The principle of the relief will be strongly supported by the property sector, which is keen for Scotland to maintain a level playing field with England in relation to investment fund activity. It is crucial for Scotland to show that it offers a supportive environment for institutional investment into its real estate assets, and the introduction of this relief would be a positive move in that respect," he said.