As of 1 March 2019, the deadline for paying stamp duty land tax ("SDLT") and filing the SDLT return with HM Revenue & Customs ("HMRC") in respect of the majority of land transactions will be reduced to just 14 days.
Currently, a taxpayer has a 30-day window from the effective date of a notifiable land transaction to submit the required SDLT return and pay any tax due. Although the 30-day window will continue to apply in certain limited circumstances, the new 14-day window for submission of return and payment of tax due will apply in the vast majority of transactions.
The clock for the payment and submission window starts ticking from the "effective date". This is usually date the transaction completes (i.e. the date the property transfers or a new lease is granted) but be aware that the effective date can be earlier if the contract is deemed to have been performed earlier.
HMRC say they have implemented this change to improve efficiency within the existing SDLT return system. They are very clear that this is a change in process and not in the law. However, taxpayers must be alert to what this change means for them.
The change will put increased pressure on you to discharge your SDLT obligations efficiently. Interest on any unpaid tax will start to run from the end of that 14-day period until the tax is paid. Penalties applied in relation to late returns and late payment will also be imposed with reference to the expiry of the 14-day period.
Where there is contingent or uncertain consideration and a taxpayer wishes to make an application to defer payment of SDLT, HMRC will simply not accept an application which is not made within the 14-day period.
HMRC have indicated that deadlines will be strictly enforced and there is no suggestion that there will be any lenience shown regarding failure to comply in the transition from 30 to 14-day deadline.
Note: For land transactions in Scotland and Wales, the 30-day window will continue to apply for the time being. However, where SDLT goes, Land and Building Trasaction Tax ("LBTT") and Land Transaction Tax ("LTT") may follow.
What action should you take?
Consider your existing procedures
- The much-reduced submission and payment period leaves little time for information gathering or administration.
- If you are involved in fast-moving transactions, perhaps where the consideration is not confirmed until very late in the day, there will be very real time pressure around getting your return submitted and any resultant tax paid.
- Are your existing procedures efficient enough to cope?
Be prepared
- Make sure that you are ready to fulfil your returning obligations well before the deadline. Think about SDLT at the outset of any transaction.
Take specialist advice
- Be aware that actions you take in relation to a transaction may inadvertently set the clock running on the 14-day window, for example taking early occupation and substantially performing your property contract.
- Complex transactions, including those involving the claim of a relief or a number of properties, may require time-consuming calculations to be performed. You can minimise the administrative impact on your organisation, and avoid costly errors, by instructing a specialist in good time.
The DWF Tax Team are are highly experienced in all areas of property taxation, including SDLT, LBTT (Scotland) and LTT (Wales). If you would like to discuss any of the issues raised above, please do not hesitate to get in touch with your usual DWF Real Estate or Tax contact.
Authored by Freya Gibb and Colleen Dooner.