Schedule 18 – Trusts
267.This schedule, introduced by section 50, provides for the treatment of trusts in respect of LBTT. Section 50(2) contains a regulation making power to allow the Scottish Ministers to amend schedule 18.
268.Trusts are divided into “bare trusts” and “settlements” with settlements defined as trusts which are not bare trusts (paragraph 20). Bare trusts are trusts where the beneficiary is absolutely entitled to the property as against the trustee (paragraph 18) and includes the bilateral type of trust where the bare trustee holds the property as nominee for another. All trusts are caught by these provisions if they have land in Scotland as trust property. Accordingly off-shore trusts will be liable to pay LBTT if they acquire Scottish land. Also if beneficiaries of trusts transfer their interest in the trust property (to the extent it is land in Scotland) there will be a liability on the acquirer to pay LBTT. Because however this type of transaction depends on a developed trust law as in England, English law is applied to Scottish trusts and those of other jurisdictions (other than the United Kingdom) to the effect that if in England a beneficiary has an equitable interest, the beneficiary in the Scottish trust and those in the other jurisdictions are held to have an interest (paragraph 2) and someone acquiring the beneficiary’s interest is also treated as acquiring an interest in the trust property (to the extent it is land in Scotland).
269.The liability to pay the tax is imposed, subject to one exception, on the trustees, with the tax able to be recovered from any one of the trustees. The exception is where there is a bare trust, in which case the beneficiaries are liable for the payment of the tax. Paragraph 6, however, provides for a right of recovery also against the “bare trustee” when the beneficiary has failed to make a return or payment.