Purchasers, tenants and lenders need to be aware of imminent changes to the SDLT filing regime.
The period for a purchaser to file Stamp Duty Land Tax (SDLT) returns and pay SDLT will reduce from 30 days to 14 days for land transactions with an effective date on or after 1 March 2019.
What is the “effective date”?
This is either the date of completion (which is the effective date of most transactions), or if earlier, it is the date that “substantial performance” occurs; for example, where the purchaser takes possession of the whole, or substantially the whole, of the property before completion.
Requirement to submit a further SDLT return
Notwithstanding the changes in the SDLT filing window, the 30-day time limit is retained where a “return by letter” is required (i.e. where a further SDLT return is needed). The most important of these scenarios for a purchaser are:
- “Contingent” payments where consideration for a purchase was contingent on a particular event happening e.g. the grant of planning permission for redevelopment;
- “Uncertain” payments where consideration for a purchase was tied to the performance of a certain event e.g. the turnover of a business;
- “Linked” transactions where a notification was submitted to HMRC in respect of a transaction and because of a later linked transaction a further return is required;
- Transactions that had the benefit of an SDLT relief which is then withdrawn;
- A lease continuing after the end of a fixed term.
What are the implications?
There is a clear emphasis on all parties involved in property transactions to be mindful of the reduced period to file an SDLT return and pay the SDLT. The Revenue’s objective for the new regime is to improve efficiency of the SDLT system. In practice, purchasers and tenants will find it prudent to ensure that their solicitor is in funds on completion and has all the necessary information available to them to file the SDLT return. Lenders will need to ensure that their borrower lawyers are holding all necessary funds to pay SDLT (as they currently do) on drawdown.
It is important to reiterate that the new deadline still includes non-working days so is therefore 14 calendar days.
It should be noted that HMRC’s automatic late filing penalties remain unchanged.