Under current legislation an SDLT (Stamp Duty Land Tax) return must be submitted to HMRC for a notifiable land transaction within 30 days of the effective date. This is usually the date of the completion of the transfer of land or the date of completion of the lease but it can be earlier, for example the date on which a tenant is granted early occupation under an agreement for sale or lease, or the date that an option to purchase land is exchanged (although note that a further return may then be required if and when the option is exercised).
The SDLT payment is also due no later than the date on which the return is filed at HMRC.
If these regulations are not adhered to, interest will be payable on the amount of the tax due and a penalty will be imposed by HMRC.
In the Autumn Statement 2015, the government stated that the time allowed for the filing of a return and the payment of the tax due would be reduced from 30 days of the effective date to 14 days of the effective day. This is actual calendar days rather than working days.
In the Spring Budget 2017 the government confirmed that the changes to the timings would be effective from 1 March 2019 and the Budget of 29 October 2018 has confirmed that we are on track for these changes to be introduced on this date with draft legislation to make the necessary changes having been included in the Finance Bill.
When we are preparing our report on a purchase or lease for you we consider the SDLT consequences of the transaction and the report details the amount of the SDLT liability, if any, that will be payable on completion (or earlier depending on when the effective date occurs). This may need to be adjusted where there is a conditional contract that has taken some months or years to fulfil and SDLT rates have changed in that interim period.
Our existing firm wide practice is to prepare the draft SDLT return for you and forward this to you, together with guidance notes, for approval and signing in advance of completion. A completion statement is sent to you prior to completion and this will detail the amount of the tax liability.
We require the signed SDLT form to be held by us, together with the amount of the tax due, prior to the completion date. Once completion has occurred we will submit the SDLT return the make the tax payment.
Our procedures will not change with the new legislation, but we wanted to highlight to you now the changes which will be effective from 1 March 2019. These effectively halve the amount of time we have to file your return and make the payment. We therefore appreciate your assistance in working with us to ensure that we are in funds at completion and are holding a signed return, and that your accounting processes allow for this.
We will, of course, seek to ensure that you are kept up to date with SDLT timings and procedures during the course of a transaction.