From 1 March 2019 the window to file a Stamp Duty Land Tax (“SDLT”) return, and pay any SDLT due, will reduce from 30 days to 14 days from the effective date of the transaction.
As a reminder, generally the “effective date” is the date of completion. However, where a contract for the sale of land or (for example) an agreement for lease is “substantially performed” before completion, the effective date is the date of that substantial performance. Examples of substantial performance include where a purchaser takes possession of the property, or pays the majority of the consideration for the transaction, before completion.
The reduced filing window will apply to all transactions with an effective date on or after 1 March 2019. Businesses and lawyers will need to ensure that internal processes are updated in line with this change to avoid late filings.
HMRC’s objective with the reduced window is to improve efficiency in the SDLT system. For more information about their rationale for the changes please click here. As we blogged in 2016 when HMRC originally consulted in relation to the proposed change, we felt that substantial simplification of the forms and of the amount of information required would need to be undertaken in order to mitigate the risk of late filings under the new regime. In our experience, the process of preparing the forms to report complex commercial transactions can be extremely time-consuming.
HMRC are now consulting on the proposed changes to the return and, this week, have published draft legislation including the reduced number of questions. There is a helpful reduction in the amount of information which now needs to be supplied, particularly in relation to new leases granted and occupational leases to which a property is subject. HMRC assert that there will be “no significant impact on business, charities or voluntary bodies […as the…] majority of returns are already filed within 14 days of the transaction”. However, SDLT remains a complicated tax and in time-pressured transactions it is now going to be even more important for all involved to engage at an early stage with the approval of the significant amount of information which still needs to be included on the returns.
For more information about the changes to the forms, or to take part in the consultation, please click here. The consultation closes at 11:45pm on 23 November 2018.