A tenant who has filed an LBTT return for a Scottish non residential lease must file a further review return on every third anniversary of the lease’s effective date for as long as the lease runs, even if nothing has changed and no tax is due. The review trues up the tax to the rent actually paid. A missed review attracts the same late filing penalties as any LBTT return, starting at £100 and rising to well over £1,000 within six months, and Revenue Scotland does not accept that it failed to remind you as an excuse.
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Why does LBTT require a return every three years?
LBTT on a lease is charged up front on the net present value of the rent for the whole term, which often has to be estimated: rents are reviewed, turnover rents fluctuate, and leases are varied, extended or partly surrendered. Revenue Scotland’s guidance at LBTT6007 explains that rather than requiring a return each time the lease changes, the legislation requires the tenant to review the position every third anniversary, pay any additional tax and reclaim any overpayment. Revenue Scotland expressly notes this differs from SDLT, so tenants used to English leases should not assume the same compliance pattern. The underlying calculation is covered in LBTT on non residential leases; this page concentrates on the review cycle itself and what happens when it is missed.
The rule is in paragraph 10 of Schedule 19 to the Land and Buildings Transaction Tax (Scotland) Act 2013. The tax at each review is always calculated using the rates and bands in force at the original effective date, so later rate changes neither help nor hurt.
Which leases are in the review cycle?
Paragraph 10 applies only where the tenant made an LBTT return for the lease, or a later return that brought it into charge, for example when a contingency ceased, a lease continued beyond its fixed term, or a variation increased the rent or term so that the lease became notifiable. In practice that means:
- a lease that was never notifiable, such as a short lease with no tax payable, has no review dates unless something later makes it notifiable;
- leases that were and remain subject to SDLT or stamp duty, typically granted before 1 April 2015, are outside the cycle;
- a lease exempted from charge by full relief claimed on the first return is outside the cycle, but if that relief is later withdrawn the section 33 return brings the lease into it, with reviews on the third anniversary of the withdrawal event (LBTT4022).
Reliefs such as sale and leaseback relief are explained in LBTT reliefs in Scotland.
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How do you work out the review dates?
Normally the review date is each third anniversary of the effective date of the original notifiable lease. Where the first return arose from a later event, such as a contingency ceasing or a variation making the lease notifiable, the cycle runs from that event instead. The cycle does not restart when the lease is assigned; the assignee inherits the original dates. If the lease is assigned or terminated on a review date, only the assignation or termination return is needed.
The return and any tax are due within 30 days beginning with the day after the review date. For a lease effective on 5 August 2015, the reviews fell on 5 August 2018, 2021 and 2024, and Revenue Scotland’s own example gives 4 September 2024 as the last day for the 2024 return.
What goes into a review return?
The review reports any changes since the effective date or the last review: rent changes, a longer or shorter term, or a change in the area let. The net present value is recalculated using the rent actually payable to date and the projected rent for the rest of the term. A variation agreed between reviews needs no separate return; it is reported at the next review.
Tenants without an agent can file through Revenue Scotland’s online portal, which needs the original return reference (in the format RS followed by digits) and the original effective date. The guidance warns that the return cannot be saved as a draft and must be completed within 90 minutes of requesting access, so the figures should be ready first. Agents use SETS. If the recalculation produces a repayment, the portal takes the tenant to a repayment claim. An amendment is possible by email only within 12 months of the filing date.
How do rent changes affect the tax at review?
Revenue Scotland’s examples show the effect in both directions:
| Change since grant | Effect at the next review |
|---|---|
| Shop rent increased from £45,000 to £70,000 a year in 2022, 15 year lease from 2015 | Additional tax of £1,548 with the 2024 review |
| Same shop lease, term reduced from 15 to 10 years in 2022 | Repayment of £1,440 claimed on the 2024 review |
| 20 year turnover lease, estimated at £250,000 a year, actual rents £170,000 to £210,000 | Repayment of £7,348 at the first review |
| Factory lease extended by five years in January 2025 | Further £16,004 due with the August 2027 review |
The turnover lease example is the clearest case for diarising reviews: the tenant overpaid £7,348 on an estimate and only recovers it by filing.
What happens if a review return is missed?
A review return under paragraph 10 is one of the returns listed in section 159 of the Revenue Scotland and Tax Powers Act 2014, so the normal LBTT late filing penalties apply (RSTP3006). Counting from the “penalty date”, the day after the filing date:
- £100 on the penalty date;
- £10 a day for up to 90 days once the return is more than three months late;
- a further penalty of the greater of £300 or 5% of the tax that would have been shown, at six months;
- another of the greater of £300 or 5% at twelve months, or up to 100% if information is being deliberately withheld.
These apply even where the review shows no extra tax, because the minimum figures are fixed. Each review date creates its own return and filing date, so a tenant who has missed several cycles faces a separate set of penalties for each. Any additional tax also carries late payment penalties of 5% at 30 days, five months and eleven months, and interest at the Bank of England rate plus 2.5%, charged as simple interest from the filing date (RSTP4002). Where a return is not made, Revenue Scotland can issue a determination of the tax with interest backdated to the filing date.
Illustration only. A tenant’s review date was 1 December 2024, so the return was due by 31 December 2024 and the penalty date was 1 January 2025. Nothing had changed and no tax was due. If the return was filed in mid September 2025, the tenant could face £100, daily penalties of £900 for the 90 days after the three month point, and £300 at six months: £1,300 for a return that showed nil.
Can the penalties be challenged?
No penalty is due if the tenant satisfies Revenue Scotland, or the tribunal on appeal, that there was a reasonable excuse. RSTP3022 lists what is generally not accepted: pressure of work, lack of information, ignorance of the law, the return being too difficult, and the fact that Revenue Scotland did not send a reminder. Reliance on another person, such as a former agent, counts only if the tenant took reasonable care. Bereavement, serious illness, and genuinely unforeseen events such as loss of records or of key staff may be accepted, provided the failure is put right without unreasonable delay once the excuse ends.
A tenant who disagrees can ask for a review by giving notice within 30 days of being notified of the decision (RSTP6006), or appeal to the First tier Tribunal for Scotland Tax Chamber within 30 days (RSTP6008). Revenue Scotland can also reduce penalties for disclosure or special circumstances. For review returns with a relevant date between 21 February 2020 and 31 August 2021, Revenue Scotland applied a specific COVID period approach, reducing penalties to nil where returns were made by the date it set.
Who is responsible when circumstances change?
The obligation sits with whoever is the tenant. Granting a standard security or floating charge, or the lender calling it up, does not move it. If the tenant company goes into liquidation or administration, the liquidator or administrator becomes the proper officer responsible for the returns under section 44. On assignation, the outgoing tenant files the assignation return and the incoming tenant takes over future reviews on the original dates.
What should tenants do now?
- List every Scottish lease where an LBTT return was filed and record its effective date and original RS reference.
- Diarise each third anniversary and the 30 day deadline for the life of the lease.
- Keep a record of rent actually paid each year, including turnover top ups and VAT.
- If reviews have been missed, file each outstanding one, pay any tax, and set out any reasonable excuse at the same time.
For the general LBTT deadlines see LBTT returns and deadlines; for the English and Welsh lease rules see SDLT on leases and LTT on leases in Wales.
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Related Accountapedia entries
- LBTT returns and deadlines
- Rent reviews and variable lease payments
- What to expect from an AML supervisory review
- How VAT statutory reviews work
- LBTT (Scotland) explained
Sources
- Revenue Scotland: Lbtt6007 three yearly review tax chargeable
- legislation.gov.uk: Act of the Scottish Parliament 2013 c. 11, schedule 19
- Revenue Scotland: Lbtt4022 further lbtt return where relief
- Revenue Scotland: Lease reviews
- Revenue Scotland: How make online lbtt lease review return tenant
- Revenue Scotland: Rstp3005 penalties failing make tax return time
- Revenue Scotland: Rstp3006 penalties failing make lbtt return time
- Revenue Scotland: Lbtt penalties submitting or paying late
- Revenue Scotland: Rstp4002 interest late payment tax
- Revenue Scotland: Rstp3022 reasonable excuse
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.