The deadline for filing and payment window of Stamp Duty Land Tax is changing on 1 March 2019

In the Autumn Statement 2015,[1] the government announced, amongst other things, that it will reduce the stamp duty land tax (SDLT) filing and payment window from 30 days to 14 days. The change will be introduced by the Finance Bill 2019, which will amend the Finance Act 2003.

The introduction was initially planned to take place in 2017-2018 but was delayed and will be effective from 1 March 2019. The deadline will apply to transactions with an effective date on or after 1 March 2019. SDLT forms will also be simplified and will have fewer questions.

What is SDLT?

If you buy or take a lease of commercial property over £150,000 or residential property over £125,000, you must pay SDLT, unless an exemption applies to the transaction. Whether or not SDLT is payable, HM Revenue and Customs requires a return to be received within 30 days of the transaction completing. If the buyer or the tenant does not provide the return within the relevant window, HMRC has the power to levy a fine.

How will the introduction affect buyers and tenants?

Despite what may appear as a welcome change to many sellers and buyers or landlords and tenants as it simplifies and expedites the process of paying SDLT, HMRC has received some concerns from conveyancers and property lawyers during the consultation.[2]

Concerns have been raised that there will be difficulties for more complex transactions where the property purchases are subject to leases and although ‘only a small proportion of reportable transactions are likely to be affected, they amount to approximately 50,000 transactions every year.’

HMRC was told that many believed that in these cases, 14 days would not be enough time to prepare the return, complete the various processes that have to take place between the agent and the client, such as approval and the transferring the funds, and arrange payment to HMRC.

HMRC responded that the majority of SDLT returns and payments are already sent to HMRC within seven days of completion, despite the current 30-day window. It also carefully considered these concerns and acknowledged that there might be difficulties for some conveyancers and property lawyers dealing with complex transactions but nevertheless implemented the changes.

HMRC said that shortening the time limit will ‘improve the efficiency of the SDLT system’.[3] Improvements to the filing and payment process will increase efficiency and will also reduce the compliance burden on HMRC and tax payers.

What happens if a return is filed late?

It is very important to bear the new 14-day deadline in mind as an automatic fixed penalty is charged if a return is filed late:[4]

  • £100 penalty is payable if a return is filed up to 3 months after the filing date;
  • £200 penalty is payable if a return is filed more than 3 months after the filing date.

A tax-based penalty is also payable if the return is not filed within 12 months after the filing date. The tax based penalty can be up to the full amount of the tax due on the return.

If you have any questions about SDLT or need assistance to file a return and pay the tax, contact our team of experienced lawyers.

Footnotes
[1] https://www.gov.uk/government/topical-events/autumn-statement-and-spending-review-2015
[2] In their response to 2016 consultation “Stamp duty land tax: changes to the filing and payment process” https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/601143/Stamp_duty_land_tax-changes_to_the_filing_and_payment_process_-_summary_of_responses.pdf
[3] https://www.gov.uk/government/publications/changes-to-the-stamp-duty-land-tax-filing-and-payment-time-limits/changes-to-the-stamp-duty-land-tax-filing-and-payment-time-limits
[4] https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns#penalties-if-you-file-or-pay-late


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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