The time limit for filing a Stamp Duty Land Tax (SDLT) return and paying any SDLT due is being reduced by more than one half, from 30 days to 14 days, with effect from 1 March 2019.
When do the changes come into effect?
The reduced filing and payment periods will apply to all property transactions with an effective date of 1 March 2019 or later.
In most cases the effective date is the date of completion of the transaction. However, it can be earlier where substantial performance of the contract for sale has taken place; for example, if the buyer or tenant is allowed into occupation of the property before completion. In this instance, the time frame to file and pay SDLT will be 14 days from this date instead of the date of completion.
Is anything else changing?
To soften the blow of the shortened deadlines, HMRC is making simplifications to the SDLT return forms, which it says will streamline the submission process.
Do the changes apply to all SDLT returns?
The new 14 day time limit applies to new transactions with an effective date on or after 1 March 2019.
However, the filing and payment periods in respect of certain further returns to HMRC will remain 30 days. For example, where further payments become due which were contingent on a later event occurring (e.g. the onward sale of the property for an enhanced value), the period for reporting this to HMRC and paying any additional SDLT on the original transaction will remain 30 days.
What are the consequences if these deadlines are missed?
Interest and penalties may be due. The flat-rate fines are £100 if the return is up to three months late or £200 if the return is more than three months late.
For more serious breaches, a tax-geared penalty of up to 100% of the SDLT due is payable. Interest is also payable on overdue SDLT.
What implications will these changes have?
Buyers and tenants will have less time after completion of a transaction to sign off the relevant SDLT forms and pay the SDLT due.
They will need to they have all relevant information ready in advance of the effective date to enable speedy filing and payment, especially for more complex transactions (such as where estimates of contingent consideration or uncertain rent are needed).
It is likely that more lawyers will request payment of SDLT and approval of the forms before completion, and so disruption will be kept to a minimum for buyers and tenants.
The Government have outlined, that currently, the majority of returns are already filed within 14 days of the transaction. Consequently, they believe that these changes will help improve the efficiency of the SDLT system overall.