Stamp Duty Land Tax payment window shortened

In its latest measure to speed up the collection of taxes the Government has announced that from 1 March 2019, stamp duty land tax returns will need to be filed, and duty paid, within just 14 days.

Whereas previously people had a month to pay, it’s soon going to require a fast turnaround of just two weeks.

So who will this affect?

The new rules will have an impact on all purchasers of land in England and Northern Ireland, and conveyancers and other agents who submit Stamp Duty Land Tax returns and make payments on behalf of purchasers.

The individuals, companies and households who will be most affected will be those who file their return without using an agent, which is expected to be fewer than 500 per year.

The shortened time limit will affect approximately 20,000 businesses, including small and micro businesses who are mainly licensed conveyancers and solicitors, because these businesses act for individuals and companies in filing SDLT returns and making payments on their behalf.

Why are the changes being made?

In 2016 HMRC consulted on the proposed changes to the filing and payment process for SDLT and, despite widespread concerns, they are moving to implement the new system. According to HMRC, shortening the time limit will not change liabilities for the purchaser, but it will improve the efficiency of the system. They say that majority of returns are already filed within 14 days of the transaction but there will soon be penalties for late payment.

What will the benefits be?

Improvements will also be made to the SDLT return to make compliance easier and these will be in place when the new time limit begins.  HMRC will incur costs of approximately £600,000 in making changes to IT systems to implement this measure.

What about more complex property transactions?

The purchase of commercial property can be more complex than in residential transactions and there is still some uncertainty around applications for deferment of payment. The Government’s response has been as follows:

“Regarding applications for deferment pending a decision from HMRC, the government does not consider that they present a barrier to a shorter filing timetable. In these circumstances, the customer should complete the return, calculating SDLT as usual on a self-assessment basis, taking into account and amount they believe should be deferred. In answering the question: ‘Have you agreed with HMRC that you will pay on a deferred basis?’ the customer should answer ‘no’. HMRC maintains that a database of all deferment applications has a target of processing these, within 28 days of receipt. If HMRC do not approve the application for deferment, the return must be amended within 12 months of the filing date.”

It remains unclear how, given the target of processing the applications within 28 days, the applicant is not going to receive a decision within the 14 day window.