your syntax is wrong.
example:
IF OBJECT_ID('tempdb..#foo') IS NOT NULL DROP TABLE #foo
GO
CREATE TABLE #foo (
[id] INT IDENTITY(1,1)
, [val] VARCHAR(50) NOT NULL
)
go
INSERT #foo ([val])
VALUES (NULL)
GO
ALTER TABLE #foo ALTER COLUMN [val] VARCHAR(50) NULL
GO
INSERT #foo ([val])
VALUES (NULL)
GO
SELECT * FROM #foo
Charlie
===============================================================
Msg 3903, Level 16, State 1, Line 1736
The ROLLBACK TRANSACTION request has no corresponding BEGIN TRANSACTION