In just over two weeks time, conveyancers will have just half the amount of time that they currently have to file a Stamp Duty Land Tax Return and pay the tax.
From 1st March, the period allowed in England and Northern Ireland will be reduced from 30 days to 14 days. Failure to meet the 14 day deadline may result in interest and penalties being levied on the taxpayer.
In both Scotland and Wales, the deadline for filing returns and paying tax will remain at 30 days.
Daniel Kennedy, partner at Shoosmiths, said: “We anticipate this shortening of the SDLT filing and payment window will present a considerable practical challenge to conveyancers and their clients, particularly those acquiring interests in commercial real estate.”
As well as adding a further administrative burden on conveyancers to act quickly, there’s concern amongst practitioners that having to rush in order to avoid a fine may lead to the increased likelihood of mistakes being made. As the 14 days include non-working days, the pressure to act quickly will be greater than before.
The Government initially announced plans to reduce the filing and payment windows to 14 days in the Autumn Statement 2015, with the stated aim of increasing efficiency and reducing the compliance burden and costs for both HMRC and customers. While the advantage to HMRC of receiving payments of tax earlier is clear, it is less clear whether the taxpayer will enjoy any increased efficiencies or a reduced compliance burden.
The final plans were confirmed in the publication of the draft Finance Bill 2018-19, and the changes take effect from 1 March 2019.
New timeframes
The 14 day window for filing the SDLT return and paying tax will apply to:
- all land transactions with an ‘effective date’ on or after 1 March 2019; and
- all land transactions with an ‘effective date’ before 1 March 2019 but that did not become notifiable to HMRC until 1 March 2019 or later
The ‘effective date’ of a land transaction is the date of completion generally, but can be earlier where a contract for the sale of land or an agreement for lease is substantially performed. Examples of substantial performance include instances where the buyer/tenant takes possession of substantially all of the property in advance of completion, or pays a substantial proportion of the consideration for the transaction prior to completion.
The current 30 day window will continue to apply in circumstances where a second/further SDLT return is required however, following the filing of an earlier SDLT return. For example, where consideration which had previously been contingent for the purposes of SDLT becomes ascertained, or where a relief claimed from SDLT on the earlier return has been withdrawn.
Practical impact
In most cases, the SDLT return for a transaction will be prepared by the conveyancer who will also arrange for payment of the tax to HMRC. The taxpayer will put the conveyancer in funds to pay the SDLT, and will review the SDLT return before authorising the conveyancer to submit the return on its behalf.
Kennedy said in a guidance note: “It is common practice in residential conveyancing for the SDLT return to be prepared in advance of completion to ensure that the conveyancer is in funds to pay the SDLT on completion.
“This is less common on commercial real estate transactions however, where preparing the SDLT return and arranging payment of tax is typically treated as a ‘post-completion’ matter.
“Best practice will now dictate that the SDLT return is prepared and authorised prior to completion, with the taxpayer funding its conveyancer to pay the tax at that time. Based on current practice, this will require a significant change in behaviours on the part of both taxpayers and conveyancers.”
One Response
Don’t all residential conveyancers pay the duty on the day of completion – 30 days, 14 days…..why not 2 days…….as same day is how we have it set up to pay?