Proposed changes to stamp duty filing and payment processes

Mon 12 Sep 2016

The government announced in its 2015 Autumn Statement that it would consider reducing the stamp duty land tax (SDLT) filing and payment window from 30 days to 14 days in 2017/18. The consultation document was released on 10th August 2016 outlining the proposed changes to the rules.

Currently a purchaser must submit an SDLT1 Return to HM Revenue & Customs (HMRC) and pay any SDLT due within 30 days of the effective date of the transaction. This is usually on completion, however it can be when the contract is performed prior to completion or, in some circumstances, on exchange.

Most agents and organisations file SDLT returns online, although this is not mandatory and some prefer to file a paper return. Individuals choosing to file their own return cannot access HMRC’s online filing service, so would generally have to file a paper return.

Although filing and payment are subject to the same 30 day limits, there is no requirement for the payment and accompanying tax return to be submitted at the same time and nor is there an option to do so. Before a payment can be made, you need to wait for a Unique Transaction Reference Number (UTRN).

The reduced filing and payment window is likely to be implemented during the 2017/18 tax year and although the exact date of implementation is unknown, it is predicted to be between 1 January 2018 and 1 March 2018.

In addition to the reduction in filing and payment deadline HMRC is also looking at proposals to modernise the SDLT filing process as a whole. This will include mandatory online filing for agents and the requirement to pay any SDLT liability electronically.

HMRC is considering a penalty for cases of non-compliance centred around electronic payments. These would likely be imposed where an agent who is required to pay electronically fails to do so. HMRC is also considering direct debit as a form of payment, and these details will be included on the online return. HMRC can only use this direct debit facility to collect any SDLT due on that return.

At present, once an SDLT return has been filed, an SDLT5 will be sent to the author of the return for onward registration. The current system means that no payment is required before the SDLT5 is issued. HMRC is therefore exploring the possibility of issuing an SDLT5 after receiving both the return and the payment.

Where individuals file their own SDLT returns as opposed to using an agent, currently, there is no online facility for this, unless they purchase the software. Proposals exist to provide an online service for such individuals, to avoid them having to file a paper return.

Currently HMRC online filing service only allows users to save the data and make amendments for up to 90 days before the return is submitted. The 90 days starts from the date the user first saved the entire return and once a return is submitted, the user can only amend it within 12 months of being submitted, by post or phone.

The proposed online functionality will hopefully help improve the process; but the onus is on those involved in property transactions to be aware of the reduced timeline in submitting the return.

For further information about this or any tax-related issue, please contact Jo White on 01403 253282, email jo.white@krestonreeves.com or visit spofforths.co.uk.

Spofforths is the trading name of Kreston Reeves LLP