SDLTM80920 - Compliance: Opening an enquiry

Information requests: Provisional figures

Where the whole or part of the consideration for a transaction is uncertain or unascertained FA03/S51(2) provides that the consideration shall be determined on the basis of a reasonable estimate.

A land transaction return must still be submitted by the filing date along with an assessment and payment of stamp duty land tax due based on the estimated figure. FA03/S90 refers.

There are provisions for later amendment of the return when consideration is ascertained - FA03/S80 and for an application to be made to defer payment in certain circumstances - FA03/S90.

There are similar provisions where the consideration is contingent. But in these cases FA03/S51(1) provides that the consideration must be calculated on the assumption that the consideration will be payable. See SDLTM50900.

What to do with land transaction returns containing provisional figures

Uncertain or unascertained consideration may arise where land is sold to a developer and part of the consideration is dependent upon the sale proceeds of the properties to be built on the land. Similarly part of the consideration may be based on figures in accounts which have not been drawn up at the date of the transaction.

When a land transaction return is received which contains a provisional figure

• the return should be risk assessed in the usual way
• if the case is selected for enquiry because other risks are present the provisional figure should be included on the enquiry plan and pursued as the enquiries proceed
• thought should be given to whether the estimate is reasonable. This will be difficult to determine without requesting further information. However no further information may be requested without opening an enquiry into the land transaction return. Refer all cases to a compliance manager where opening an enquiry on the basis that the land transaction return contains a provisional figure is considered. This is a developing area and further more detailed guidance will be issued as experience grows

Once the consideration is ascertained FA03/S80 applies.

If the effect of the new information is that a transaction becomes notifiable or chargeable, or additional tax is payable, the purchaser must make a return within 30 days. The provisions of FA03/SCH10 apply to these returns in the same way as to a land transaction return, by virtue of FA03/S80(3).

This return should be treated as a normal land transaction return and an enquiry may be opened in the normal way. If any information comes to light as a result of an enquiry into this return which casts doubt on the earlier return an enquiry into that return may only be opened if the time limit for opening an enquiry has not ended.

If the enquiry window has closed action can only be taken if a discovery is made. See SDLTM84200+.

If it is considered that the estimate is not a reasonable estimate, and

• the final figure is promised within the 9 month enquiry window they should note the case for further review at that time. If it is not received the compliance caseworker should open an enquiry immediately
• the final figure is promised after the 9 month enquiry window, they should open an enquiry some time before the window closes, to protect the position

Do not open an enquiry without reference to a compliance manager.

When opening an enquiry the final figure may be requested immediately if it is considered that it should be available, or the enquiry can be used to establish the date by which it will be provided.

Further information setting out the basis on which the estimate was arrived at may also be requested.

Where an application has been made to defer payment by virtue of FA03/S90 the purchaser will already have been advised at what date a revised land transaction return is required.