Hansard

I start by reminding members of my entry in the register of members’ interests, which shows that I am a member of the Law Society of Scotland.

Following on from the convener of the Finance and Constitution Committee, I fear that we might be in for a contest this afternoon to see who can come up with the Dickens figure whom the cabinet secretary most corresponds to. I give you, Presiding Officer, Mr Micawber from “David Copperfield”, who is described as

“always in debt yet recklessly cheery and blindly optimistic”.

I ask colleagues to beat that if they can. [Laughter.]

On behalf of the Scottish Conservatives, I welcome the Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill. The finance secretary knows that I have constituents who were caught in the very circumstances that the bill attempts to redress, and it might be helpful to the Parliament if, without giving their names, I narrate the circumstances of the case as an illustration of why the bill is important.

In the case of my constituents, we had a young couple who had recently married. They lived in a property that the husband had owned prior to the marriage, which was therefore in his sole name. The wife did not own any property. In time, they decided to move to a larger property, which was purchased in their joint names, as is the normal practice. The entry date for the new property was a few weeks prior to the entry date for the sale of the existing one, so there was a short overlap. There is nothing unusual in that. That led to them paying an additional dwelling supplement on the purchase price. If I recall correctly, the sum was about £13,000, which represented a substantial financial commitment. Nevertheless, they fully expected that the sum would be refunded to them in the normal way after the sale of the first property, as they were second home owners only on a short-term and inadvertent basis.

I am sure that members can imagine their horror when they discovered that Revenue Scotland was claiming that the additional dwelling supplement was not repayable in their case. They had never budgeted for an additional £13,000 and had no idea how they would meet that additional charge.

As the cabinet secretary has pointed out, the problem was that, as a result of the way that the original legislation was drafted, only the husband was treated as replacing a main residence. Because the wife did not have her name on the title deeds of the original property, she was not treated as replacing a main residence and therefore, on the strict interpretation of the legislation, ADS could not be reclaimed on the sale of the first property by the husband.

It is clear that such a situation was never the policy intent of the original legislation. ADS was introduced as a revenue-raising measure to produce tax from those buying a second property, or more properties, either for investment purposes or as a holiday home or other residence. It was never intended to be a tax on those who were simply replacing their main place of living. Yet, due to what is essentially an error in the way that the original legislation was drafted, couples such as my constituents were inadvertently caught by it.

I drew my constituents’ case to the finance secretary’s attention, as I am sure that other members did with similar cases, and I am pleased that the Scottish Government acted very swiftly. A statutory instrument was brought in last year to resolve the problem for new purchasers after June 2017. Primary legislation was required to give retrospective relief to those who were caught during the period from the introduction of ADS—1 April 2016—until June 2017, hence we have the bill before us. It is a timely and very welcome bill, and it will be much appreciated by the individuals who are caught in the situation that I have just outlined.

I would like to raise two other minor issues in relation to the bill before us. First, we have to make sure that all those who would benefit from this bill are aware of its passing. I raised that issue with the cabinet secretary when he came to the Finance and Constitution Committee, and indeed the committee convener just referred to it in his opening speech. There is a particular case for Revenue Scotland to engage with the Law Society of Scotland, which will be best placed to be aware, through its member companies, of the cases affected. It can then be ensured that everyone is aware that the legislation has been passed, so that those who are able to reclaim ADS can do so.

The other point relates to separate issues in connection with LBTT, which were raised in evidence to the committee by the Law Society and the Institute of Chartered Accountants in Scotland. Adjustments to the LBTT ADS regime would be beneficial in a number of other areas, for example, in relation to the transfer of investment properties to pension funds or in relation to LBTT group relief where share pledges are involved. I welcome the fact that the cabinet secretary has this afternoon published a letter saying that he is prepared to consult on the latter matter, which takes us forward in a very helpful fashion.

The suggestion has also been made that an annual finance bill in the Scottish Parliament could deal with the minor tidying up of matters such as those. It would be very welcome if the Scottish Government were to consider that suggestion.

I reiterate that the Scottish Conservatives will support the bill before us at stage 1 this evening. I hope that it becomes law as quickly as possible, and I know that there are constituents of mine who will be very grateful if it does.