Archer (UK) Limited vs Revenue Scotland: FTT Rules No LBTT Charge for Lease Extension Granted Under SDLT

In a landmark decision, the First Tier Tribunal (FTT) for Scotland has ruled that extending a lease originally granted under the Stamp Duty Land Tax (SDLT) regime does not trigger a new Land and Buildings Transaction Tax (LBTT) liability.

This ruling has significant implications for tenants and property professionals in Scotland, particularly those dealing with leases executed before the introduction of LBTT in April 2015.

Case Overview: Archer (UK) Limited vs Revenue Scotland [2025] FTSTC 10

The case involved Archer (UK) Limited, a business tenant whose lease was initially executed in 2014, when SDLT was still in force in Scotland. In July 2020, Archer and its landlord agreed to extend the lease term by five years through a Minute of Variation. This document formally modified the original lease without creating a new lease.

Initially, Archer believed that this extension constituted a deemed new lease under Article 13 of The Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014, which governs the transition from SDLT to LBTT. Consequently, Archer filed an LBTT return and paid the self-assessed tax.

However, Revenue Scotland later issued a closure notice recalculating the LBTT due, increasing the liability by over £65,000. Archer contested this decision, arguing that the lease extension did not create a new lease for LBTT purposes and applied for a refund of the overpaid tax.

On 10 July 2025, the FTT issued its decision, siding with Archer and concluding that the lease extension did not constitute a new lease under LBTT.

Analysis: Understanding Article 13 & Legal Provisions

This article should not be interpreted as solid legal advice and individuals should always contact experienced professionals, like UK Property Accountants, before taking any action. Nonetheless, this article does seek to simplify the case for easy understanding.

The central issue in this case was the interpretation of Article 13 of the transitional provisions, which states that a lease variation after 1 April 2015 is treated as a new lease for LBTT purposes if, under SDLT, such a variation would have been treated as a new lease under Schedule 17A of the Finance Act 2003.

The FTT examined whether extending a lease under Scots law constitutes the grant of a new lease. Under Scottish property law, an extension of an existing lease is not considered the creation of a new lease. This contrasts with English property law, where extending a lease can be treated as a new lease.

The tribunal emphasised that tax liabilities must be determined by statutory provisions, not administrative guidance. It noted that while Revenue Scotland's guidance aligned with HMRC's SDLT guidance, these interpretations did not have the force of law and could not override the statutory framework.

Implications for Taxpayers

Tenants who have extended leases executed before 1 April 2015 and paid LBTT may be entitled to reclaim overpaid tax, subject to statutory time limits.

Property professionals should review historic lease extensions to ensure that LBTT was correctly applied and consider potential repayment claims.

The case underscores the importance of distinguishing between administrative guidance and statutory law in determining tax liabilities. It also highlights the need to understand the complexities of both LBTT and SDLT to ensure we are always compliant.

Revenue Scotland’s Position

Following the tribunal's decision, Revenue Scotland stated that the ruling raises complex issues and is under consideration.

The authority continues to apply its published guidance, and it is uncertain whether the decision will be appealed or if the Scottish Government will amend the legislation. So, those affected by this and other property taxes must stay updated.

Conclusion

The FTT's decision in Archer (UK) Limited v Revenue Scotland provides clarity on the treatment of lease extensions under LBTT. It reinforces the principle that tax liabilities must be determined by statutory provisions and not administrative guidance.

Tenants and property professionals affected by this ruling should review their historic lease transactions and consider potential repayment claims to ensure compliance and avoid unnecessary tax liabilities.