Revenue Scotland’s Guidance Is Not the Law: What Recent Tribunal Decisions Mean for Property Transactions

By Elaine Kennedy-Walton

16 Mar 2026 4 min read

Introduction

When buying or selling property in Scotland, many people turn to Revenue Scotland's published guidance to understand how Land and Buildings Transaction Tax (LBTT) applies. The guidance can be a helpful starting point, but a series of recent Tax Tribunal decisions has made clear that Revenue Scotland's guidance is just that — guidance. It is not the law, and nobody should assume it is a reliable substitute for the law itself.

What Happened?

In Ball & Torokoff v Revenue Scotland [2024] FTSTC 6, the buyers of a large historic Edinburgh property, most recently used as offices prior to sale but vacant at the effective date, relied on Revenue Scotland's guidance and treated the property as non-residential, paying LBTT at the lower rate. Revenue Scotland later disagreed, reclassified the purchase as residential, and issued an additional tax bill of £50,350. The buyers appealed, arguing that Revenue Scotland should be held to its own published guidance.

The Tribunal rejected that argument. It made clear that Revenue Scotland's guidance does not have the force of law. It "represents only [Revenue Scotland's] view or interpretation of the law" and "it is for the Tribunal to interpret the law."

The same principle came up again in Lambert & Nago v Revenue Scotland [2026] FTSTC 2. There the property was a house in Multiple Occupation and the buyers sought to rely on Revenue Scotland's guidance on "Non-Residential transactions," which focused on whether a property was "uninhabitable". The problem was that "uninhabitable" is not what the law actually says. The law asks whether a building is "suitable for use as a dwelling", a broader and quite different question.

The Tribunal referred back to Ball & Torokoff and repeated the same message: Revenue Scotland's guidance is simply its view of the law, not the law itself. It added that a misleading word in the guidance, whilst "unfortunate," was not enough for the buyers to argue they had been given an assurance they could rely on.

A Wider Pattern

These two cases do not stand alone. In Archer (UK) Limited v Revenue Scotland [2025] FTSTC 10, the Tribunal looked at Revenue Scotland's guidance on the LBTT treatment of lease extensions. Revenue Scotland's position was that extending an existing lease which pre-dated the LBTT regime should be taxed as if it were a new lease therefore attracting LBTT. The Tribunal disagreed, finding the guidance was “flawed” under Scots law; extending a lease is not the same as granting a new one. Taxes, the Tribunal stressed, can only be imposed by law — not by a tax authority's interpretation of the law. Notably Revenue Scotland has publicly stated on its website that: (a) it continues to apply its own guidance despite this ruling; (b) their appeal is expected to be heard in June; and (c) the Scottish Government are considering implications of this decision.

What Does This Mean in Practice?

The practical implications for anyone buying, selling, or leasing property in Scotland are significant:

Guidance is a useful starting point, but it is not law. Revenue Scotland's guidance can help explain how it interprets the rules, and it is important to be aware of how Revenue Scotland might view a transaction. But anyone who relies solely on that guidance without checking the actual law does so at their own risk even where they are acting in good faith.
The wording in the guidance may not match what the law actually says. In Lambert & Nago the guidance talked about properties being "uninhabitable," but the law asks whether a property is "suitable for use as a dwelling". Those are different things. For example, a property that needs major renovation may still count as residential if it was either:
1. built as a home; or
2. was previously used as a home
AND can be made into one again, even if nobody could comfortably live there right now or change of permitted use is required.
Professional advice matters. In Lambert & Nago, the Tribunal noted that the buyers' original solicitor had clearly misunderstood the rules and given incorrect advice. The Tribunal made clear that if you are let down by your solicitor, your complaint is with the solicitor, not with Revenue Scotland.

Conclusion

The message from the Tribunal is clear and consistent: Revenue Scotland's guidance is not the law. It is simply how Revenue Scotland interprets the law at a given time, and that interpretation may be incomplete, misleading, or simply wrong. For anyone involved in Scottish property transactions, the safest course is to make sure your advice is based on the actual law and the latest Tribunal and court decisions.

If you have any questions about how these decisions might affect your property transactions or LBTT position, please do not hesitate to get in touch with Ian Carnochan - Burges Salmon (Tax) or Robert Forman - Burges Salmon (Built Environment) or Dixcee Fast - Burges Salmon (Energy).