COP25 - Enquiries into companies and partnerships
 

Contents

  • Introduction
    - Enquiries into company and partnership land transaction returns
    - Can we amend the land transaction return?
    - What happens when you receive a land transaction return?
  • The enquiry
    - Starting enquiries
    - After the time for starting enquiries
    - Do we have to co-operate with your enquiry?
    - Professional representation
    - Providing information
    - Submitting any subsequent land transaction returns
    - Stopping the enquiry
    - What about meetings?
  • If nothing is wrong
  • If something is wrong
    - What if the company (or partnership) has paid too much stamp duty land tax?
    - Closure notices
    - Contracts
    - What if we cannot agree?
    - Paying stamp duty land tax after the enquiry
    - Appeals
    - What happens next?
    - Interest and penalties
    - What happens at the end of the enquiry?
  • Your rights under Our Service Commitment to you
    - During enquiries
    - Keeping you informed
    - Confidentiality
    - Costs
    - Complaints
    - Help us to improve our service
  • Further information

This Code of Practice tells you how our Stamp Offices will carry out enquiries into company and partnership land transaction returns.


Introduction

This Code of Practice promises companies and partnerships fair treatment under the law and in accordance with Our Service Commitment to you. There is a copy of the service commitment at the back of this leaflet, which explains the rules that we will follow and your rights and responsibilities in particular situations.

We want companies and partnerships to pay the right amount of stamp duty land tax (SDLT): no more, no less.

We will be pleased to help if you

  • have any queries after reading this leaflet, or
  • need more information on completing a company or partnership land transaction return.

Enquiries into company and partnership land transaction returnsWe want you to feel confident that

  • other taxpayers are paying what they should, and
  • we operate the SDLT system fairly.

In order to do this, we enquire into some land transaction returns. We ask for information to help us understand the amount of SDLT the company (or partnership) has paid and to check that it is right. We want to make sure you do not pay too much tax or too little. Either way, we will tell you if we find something wrong.

To encourage compliance with SDLT obligations and make sure the whole system is operating fairly, we will select some land transaction returns for enquiry at random. We can then check if anything is wrong which may not be apparent at first glance.

When the company (or partnership) has sent in the land transaction return, you should tell us at once about anything that

  • you discover is wrong, or
  • should have been included but has been left out.

Can we amend the land transaction return?

You can amend the company's (or partnership's) land transaction return, as long as we receive your amendment within 12 months of the filing date (that is, 30 days after the `effective date' of the transaction). The effective date is generally the completion date of the transaction, whether or not this is shown in a document.

However if a contract is substantially performed before completion, the date that `substantial performance' takes place is the effective date. Broadly, substantial performance is when

  • a substantial amount of the consideration (generally 90% of the total amount) is paid
  • the purchaser is entitled to possession of the property
  • the first amount of rent is paid, or
  • option or right of pre-emption is acquired.

You cannot amend the land transaction return after this time, but if you discover later that you made a mistake, you may claim `mistake relief'.

If you make an amendment during an enquiry, we can check it as part of that enquiry. This Code will then apply to the amendment as well as to the land transaction return that we were already enquiring into. If we enquire into the amendment as well, it will not take effect until we finish the enquiry.

If you believe the company (or partnership) has underpaid tax because of your amendment, we recommend that you make a payment towards any additional amount because interest will run from the date that the SDLT should have been paid. See Interest and penalties.

What happens when you receive a land transaction return?

We use the information that you give us to work out if the SDLT the company (or partnership) has paid is correct.

If we find any obvious mistakes, for example, in the rate of SDLT the company (or partnership) has applied to the transaction, we may contact you to get clarification without making an enquiry into the transaction.

If the land transaction return shows that you have paid too much SDLT, we will normally repay the excess. But, if we have already started enquiries into the land transaction return we will usually hold on to the repayment until we are sure the land transaction return is correct. However, if it is clear from the facts that some repayment will be due whatever the outcome of our enquiries, we will repay that amount before final settlement of your SDLT liability.

We carry out a full programme of checks, including

  • looking at information in the company's (or partnership's) land transaction return, and
  • comparing it with information from other sources.

After these checks, if we think that the land transaction return may be incorrect, or if we think something needs a fuller explanation, we will start enquiries.

We can enquire into any land transaction return, and may do so at random. Therefore, if we do make enquiries into the company's (or partnership's) land transaction return it does not mean that we think it is incorrect.

When we ask questions or need information we will not tell you whether we have selected the land transaction return at random or as a result of our checks. This is because it does not make any difference to how we carry out our enquiry.

Once we start an enquiry, our only purpose is to make sure the land transaction return is correct. However, the initial request may identify particular areas to focus our enquiries on.

The enquiry

Starting enquiries

We start an enquiry to check whether the company's (or partnership's) land transaction return is correct.

We will tell you (and your professional adviser if you have one) in writing

  • that we intend to start enquiries, and
  • explain your rights and responsibilities.

We will also tell you what information we need from you. Exceptionally, we may not be able to do this, but we will always explain why and say when we expect to be able to do so.

In our letter we will tell you when we expect you to reply and send us any information we have asked for.

After we receive the land transaction return, we normally have nine months from the fixed filing date (that is, 30 days after the effective date of transaction) to tell you that we intend to start enquiries.

If you send in the company's (or partnership's) land transaction return late we will have nine months from the date we received the land transaction return. We have the same time to open an enquiry into any amendment that you make to your land transaction return after the fixed filing date.

Example

If the effective date of the transaction is 2 March 2004 and we receive the land transaction return

  • on 15 April 2004 we can start an enquiry at any time up to 3 January 2005.

If you then amend the land transaction return

  • on 25 April 2004 we can start an enquiry at any time up to 26 January 2005. But if after the enquiry time limit for the land transaction return has closed, we can only enquire into the amendment.

At the end of that time, if we have not started any enquiries, the land transaction return will normally be accepted as the final version.

After the time for starting enquiries

We cannot start an enquiry after the times above. But we can still assess and collect from you any extra SDLT we later find that the company (or partnership) owes. We can only make an assessment after the time for starting an enquiry if we discover

  • an error that we could not reasonably have been expected to know about from the information that you gave on your land transaction return (We can make an assessment at any time up to six years after the effective date of the transaction.), or
  • the land transaction return was incorrect because of negligent or fraudulent conduct. (We can make an assessment at any time up to twenty one years after the effective date of the transaction.)

If we discover an error after the time for starting an enquiry we might ask you for further information to make sure that we assess the right amount of SDLT. We will behave towards you in the same way as we set out in this leaflet but the legal rules for enquiries will not apply. This means we do not

  • issue the formal opening and closing letters that we do in an enquiry. In particular, the section on Starting enquiries and any references to a `closure notice' will not apply
  • have the same formal powers, but we do have some different ones to help us get the information we need.

If we discover an error after the time for starting an enquiry we will write to tell you what we are doing and why. This may be referred to as an `investigation' rather than an `enquiry'. We will try to agree the final position with you.

If we discover that the company (or partnership) owes us extra SDLT we can settle the matter by making assessments for the SDLT you owe us. You can appeal against any assessment (see the section on Appeals).

Do we have to co-operate with your enquiry?

We would welcome your co-operation with our enquiry and in establishing the correct stamp duty land tax. How much you co-operate with us and provide us with information is entirely up to you. However, in making your decision, you may wish to get help from a professional adviser. If you do, your adviser can

  • accompany you to any meetings held with us, and
  • correspond with us on your behalf.

We will make notes of any meetings and copies of these notes will be given to you or your adviser if you ask for them.

Our enquiry may show that an offence has been committed for which the company (or partnership) may have to pay a penalty. This is worked out as a percentage of the SDLT underpaid or paid late.

When working out the amount of the penalty, we will take into account

  • how helpful you have been, and
  • how freely and fully you volunteered any information, which was omitted or understated.

There is more information about penalties, see Interest and penalties.

Professional representation

The company (or partnership) can, at any time

  • choose to be professionally represented, for example, by an accountant, tax adviser or solicitor
  • change or stop using a professional adviser.

If you want us to deal with your professional adviser you need to complete box 59 on the land transaction return. This lets us know that your professional adviser has the authority to act on your behalf.

We will deal with any professional adviser the company (or partnership) appoints, unless you ask us not to. If there is little progress in settling matters, we will tell you and may then deal with you direct (or with any other professional adviser that you appoint).

Make sure the professional adviser has all the facts. You are responsible for the company's (or partnership's) SDLT affairs and for the accuracy of all the information given to us, even if you have a professional adviser.

Providing information

When we ask for information you should reply as quickly as you can. This will help to keep the company's (or partnership's) time and costs, and ours, to a minimum.

You must keep the records supporting the transaction and any other records you have used to fill in the land transaction return. We can charge a penalty if you do not keep all the records. In particular, once we start an enquiry you must keep all records that are relevant throughout the whole enquiry.

We will ask questions and explain what further information we need as clearly and simply as possible. We will only ask for information relevant to anything that is in, or should be in, your land transaction return.

If we ask to see the documents and records that the land transaction return was based on, you should be able to provide these quickly and easily, as they should already be in your professional adviser's possession. If we decide we need other information, we will tell you why.

We will try to

  • take up as little of your time as possible by asking early on in our enquiries for everything we need to know
  • avoid asking for information in a piecemeal way, but this is not always possible as one question may lead to another.

It may help if you tell us about any special features of the company's (or partnership's) transaction, which you think may be relevant to any questions we have asked.

Occasionally, we may need to get information from other people if we cannot get it directly from you or we need to check something. We will

  • keep the company's (or partnership's) affairs confidential
  • not tell other people that we are enquiring into the land transaction return.

Time limits

We will give you a reasonable amount of time to provide any information that we need, normally 30 days, but we will be flexible about this. We can agree a time limit if we realise it may take longer than normal for you to get the information we have asked for.

If you think that we have not given you enough time you should tell us how much more time you need, and why. We will let you have more time if this seems reasonable. If we cannot agree, we will tell you why.

You should tell us straightaway if

  • you have difficulty getting the information we have asked for and we will discuss with you how you might get it
  • you think it is not relevant to our enquiries.

We will consider your reasons carefully and if we think we still need the information we will tell you why.

Formal powers

If you do not give us the information we have asked for and we have to use our legal powers to get it from you we will

  • explain our legal powers to you
  • advise you of any penalties that might arise if the company (or partnership) does not co-operate, and
  • tell you about your right to appeal to independent Appeal Commissioners.

Place

You can ask us to examine the company (or partnership) records at your business premises. We will usually be able to do this. Sometimes we may suggest this ourselves. This will save you sending them to us and can often be more convenient for everyone. The length of our visit will depend on the amount and complexity of the records we need to examine.

You can also ask us to examine the company's (or partnership's) records at the premises of your professional adviser or we can take records to our office to examine them.

Returning records

We will try to return company (or partnership) records as soon as possible. If you need them in the meantime, you can ask us to return any records that we hold. You should tell us what you need, and when you expect to be able to send them back. We will either

  • send them to you if we can. You should take care of these records so that you can send them back to us complete and in their original condition, or
  • give you copies, if we need to keep them. We will do this free of charge, and within seven days of receiving your request if possible.

Submitting any subsequent land transaction returns

You should not let our enquiries into one land transaction return delay the submission of any subsequent land transaction returns.

Stopping the enquiry

You can ask us why we are continuing our enquiries, if you believe

  • you have given us all the information and explanations that we need to check your land transaction return, and
  • we have had enough time to consider the information and explanations.

We will reconsider the matter to see whether we can agree or explain what further information we need to check your land transaction return.

If you think we don't have any grounds for continuing our enquiry, you can ask the Appeal Commissioners to consider whether the enquiry should be closed. For example, if you believe

  • you have given us all the information that we need to determine the accuracy or completeness of the land transaction return, or
  • we are prolonging the enquiry unnecessarily.

If you want to apply for the enquiry to be closed you should tell us your reasons in writing. You can send your application to the officer dealing with your enquiry to pass on to the local Commissioners, or you can send your application directly to the Commissioners.

What about meetings?

Sometimes, we will ask to meet you and other officers (or partners) of the company (or partnership) to discuss aspects of your transaction of which only you have first hand knowledge or because a meeting may be the quickest way of discussing a large amount of information you have sent us. We will tell you, in advance, in an agenda, which aspects we will want to discuss.

You can ask the company's (or partnership's) professional adviser, if it has one, to attend any meeting we have with you.

You or other officers or employees of the company (or partnership) do not have to come to any meeting, but we will expect you to give us quickly any information we consider essential to our enquiries. Meetings allow you to

  • clarify and explain any points you think we may not have understood, and
  • ask questions as well.

If we believe that a meeting would be more beneficial than correspondence, we will make this clear to you.

Place and time

We may ask you to have a meeting at

  • our offices, or
  • the company's (or partnership's) business premises.

You should tell us if it is not convenient for you to have the meeting where we suggest. We are usually able to meet you wherever is most convenient to you.

Meetings will usually be in office hours but if this is difficult for you it may be possible to meet at other times.

Answering questions

You should make sure the answers you give us at meetings are correct. If you are not sure about an answer you should say so. It is better to say you don't know, or can't remember, rather than worry that you may have given the wrong answer.

If, after a meeting, you realise something you said may have been wrong, you should tell us straightaway.

Bringing documents

You and your professional adviser should bring any documents relating to the land transaction return under enquiry, which you think may help you answer questions or support points about the transaction.

If you are not sure what you will need, you can ask us.

Taking notes

We will take notes in any meeting we have with you and you can ask for a copy.

We may ask you to sign a copy of our notes to show that they record the main points of what was said. You can comment on these notes and to tell us about anything you disagree with. You do not have to sign them or comment on them, but a signed record could be useful to both of us if we cannot reach agreement and have to ask the Appeal Commissioners to revolve matters.

You or your professional adviser can also take notes during the meeting.

If nothing is wrong

If we find nothing wrong, we will tell you and let you know that our enquiries have finished.

We will send you a letter called a `closure notice' (see Closure notices). You have the right to appeal against our conclusions in the closure notice. If we have found nothing wrong we will not change anything in the company's (or partnership's) land transaction return.

You can appeal if you feel that our enquiries showed the company (or partnership) had paid too much SDLT but we did not reduce the amount you paid.

If you amended the company's/partnership's land transaction return during our enquiries the closure notice will show your amendment. This may mean that you owe us more SDLT. Interest is charged on any SDLT paid late. See Interest and penalties.

If the company (or partnership) has paid too much SDLT you may be due interest from us.

If something is wrong

If we find something wrong in the company's (or partnership's) land transaction return we will

  • suggest changes we believe are reasonable in the light of all the information we have
  • try to agree with you any changes that are needed to your own figures, and
  • explain how we arrived at the figures we put forward. If you do not understand them, you should let us know.

If you make an amendment to the company's (or partnership's) land transaction return during an enquiry, it will not take effect until we have finished the enquiry. We have a separate right to enquire into the amendment, but will normally look at it as part of the enquiry we have already started. Our conclusions and amendments will then be about both the original land transaction return and your amendment.

What if the company (or partnership) has paid too much stamp duty land tax?

During our enquiry we may find that the company (or partnership) does not owe us as much stamp duty land tax (SDLT) as you have paid. We will check any mistakes whether they lower the amount of SDLT the company (or partnership) should have paid or mean you owe more.

At the end of our enquiry if we decide that the amount of SDLT the company (or partnership) paid was too high, we will repay the overpaid tax to you.

If we owe you money because the company (or partnership) paid too much, we will pay you interest from the date of your payment up to the day we repay you.

The rate of interest we pay is lower than the rate of interest we charge.

Closure notices

When we have finished our enquiries, we will normally (but see Contracts below) tell you in writing

  • that the enquiry has finished
  • what our conclusions are, and
  • what amendments we are making.

This is called a `closure notice'.

You have the right to appeal against our conclusions or amendments; the closure notice will explain this.

Contracts

If our enquiry ends with penalties being charged (see Interest and penalties) we will try to settle matters through a contract between us.

We will talk to you and the company's (or partnership's) professional adviser about this.

What if we cannot agree?

If we cannot agree a contract or any amendments or assessments, we may use the information or documents you gave us during the enquiry in any appeal proceedings to decide the SDLT, interest and penalties which the company (or partnership) owes.

Paying stamp duty land tax after the enquiry

We will ask you to pay any stamp duty land tax (SDLT) due on an amendment to your land transaction return within 30 days of receiving the closure notice for the amendment. The company (or partnership) should pay the tax as soon as possible.

Appeals

You can appeal to independent Appeal Commissioners within 30 days of the issue date against

  • our conclusions or any amendment we make to the company's (or partnership's) land transaction return, or
  • any other assessment we make that you do not think is correct.

You can find out how to make an appeal by reading the notes with the amendment or assessment, or by asking us to explain the process to you.

What happens next?

We will try, wherever possible, to reach an agreement with you about your SDLT liability without a formal appeal hearing.

If we cannot reach an agreement, the company (or partnership) has the right to ask for any appeals to be heard by the Commissioners. We will arrange for this to be done or, if you prefer, you can contact the Clerk to the Commissioners yourself. We will give you the Clerk's address if you ask for it.

If you ask for an appeal hearing and we think we will need more time for our enquiries, we will ask the Commissioners to adjourn the hearing to a later date. Likewise, if we ask for an appeal hearing and you need more time to provide information, you can ask the Commissioners to adjourn the hearing to a later date. In both cases, the Commissioners will decide whether to accept the request for an adjournment.

If there is little or no progress being made towards settling the appeal by agreement we may ask the Commissioners to hear it.

We will

  • tell you if we intend to ask the Commissioners to settle the appeal, and
  • explain the figures we propose to put forward at least 14 days before the hearing date, unless there are exceptional circumstances. The figures we put forward may differ from those we suggested to you during our negotiations.

You have the right to

  • put the case to the Commissioners and to tell them the figures you believe are correct
  • choose whether or not to have the case presented for you by a professional adviser, or by any other person, providing the Commissioners do not object.

After listening to both parties and considering all the evidence, the Commissioners will decide whether the amendment or assessment should

  • remain unchanged
  • be increased, or
  • be reduced.

If there is anything that you do not understand or feel you need to know about the appeal procedure, you can ask us or, if you prefer, the Clerk to the Commissioners.

Interest and penalties

Interest is payable whenever amounts are paid late.

The company (or partnership) may have to pay a penalty if

  • you send in the land transaction return late
  • we find something wrong with the land transaction return during our enquiry.

If we don't receive the land transaction return or any payment within 30 days of the effective date of the transaction (the filing date) but within three months of the 30-day limit, the company (or partnership) will automatically get a £100 penalty. In all other cases, the company (or partnership) will automatically get a £200 penalty. Any late payment will also receive an interest charge.

We can only seek penalties for incorrect land transaction returns if SDLT is understated and the error was due to negligence or fraud.

When working out any penalty, we will take into account

  • how much you voluntarily disclosed anything that was wrong
  • your help in concluding our enquiries, and
  • the seriousness of your errors or omissions.

For example, if we ask you to come to a meeting but you choose not to and, as a result, the enquiry took longer to settle than was necessary, we may then take the delay into account when working out the level of penalty that is due.

You should tell us about any matters you think are relevant when we are working out what penalty to charge.

We will try to agree a settlement by contract on the amounts of tax, interest and penalties that are due from the company (or partnership). If we cannot reach an agreement, we may formally determine the penalty we think is appropriate.

You have the right to ask the Appeal Commissioners to hear an appeal against any penalty determination.

If you do not understand how we have worked out interest or penalties, or why they are due, you should ask your professional adviser or us.

What happens at the end of the enquiry?

If our enquiries show that something is wrong we will

  • explain what it is
  • tell you how to get things right in the future.

If you are still not sure about the records the company (or partnership) needs to keep in the future, or the amount of detail required, ask the company's (or partnership's) professional adviser or us to help you.

If our enquiries show that the land transaction return was incorrect we may ask you to sign a Certificate of Disclosure, confirming that you have now declared all the transaction details. We will not do so if our enquiries have shown that the land transaction return was correct.

We will take a very serious view if you sign a Certificate of Disclosure you know to be false, so you should consider it carefully before signing.

Your rights under Our Service Commitment to you

During enquiries

We will always be courteous, fair and professional.

We will normally deal with letters from you or the company's (or partnership's) professional adviser within 15 working days. If we cannot reply quickly, for instance, because of the amount or complexity of the material you have sent us, we will let you know the reason for the delay.

Keeping you informed

Although we will not give reasons for making enquiries, we will explain the company's (or partnership's) legal rights and the reasons for any actions we take as our enquiries proceed. We will tell you, for example, why we

  • need a meeting with you
  • are not satisfied with an explanation you may have given
  • are amending the land transaction return
  • need to use our legal powers to get information or documents.

You can ask us at any time to

  • explain the company's (or partnership's) rights
  • tell you why we have taken a particular action, or
  • explain what you must to do under the law.

You can ask for these explanations even if we have already given them to your professional adviser.

You can also ask for any of our information leaflets. These have been written to help you. We have leaflets in other languages, Braille, large print or audio, just ask about them at your local Inland Revenue office or Enquiry Centre.

Copies of our leaflets are on our website at www.inlandrevenue.gov.uk

Confidentiality

The company (and its directors and shareholders) or partnership (and its partners) has the right to the same high degree of confidentiality that all taxpayers receive.

You do not have to discuss the company's (or partnership's) tax affairs in front of other people. If there is anything you do not wish to discuss with others present, please tell us.

We will only disclose information to people without your authority in the limited circumstances allowed by law, such as, at Appeal Commissioners' hearings.

Costs

We know that dealing with our questions may cost the company (or partnership) time and money, so we will only ask for information that we need to check that the land transaction return is correct.

We will end our enquiries as soon as possible. That is, when we are confident the land transaction return is correct, or that any mistakes or omissions involving more than a trivial amount of SDLT have been identified and put right.

Complaints

Our leaflet COP1 'Putting things right. How to complain' explains when we will give financial redress for mistakes we make.

Please tell us if you believe

  • you have been denied your rights
  • we have made a mistake
  • you have been treated badly during our enquiries
  • we have not acted in accordance with this Code of Practice.

To help you to do this and to avoid further inconvenience we have a straightforward and easy complaints procedure.

You can complain in writing or by phone or fax. We will try to settle your complaint as quickly as possible.

Help us to improve our service

We welcome any general comments you may have on how to improve our service to all our customers.

If you would like to suggest any changes to the way we do things or if you have any comments about this Code of Practice, please write to us at

Inland Revenue
Stamp Taxes Policy Team
Room 116, New Wing
Somerset House
Strand
London
WC2R 1LB.

Further information

We produce a wide range of leaflets. Some we have mentioned which you might find useful are

COP1 Putting things right. How to complain.

Our leaflets are available at www.inlandrevenue.gov.uk and from any Inland Revenue office or Enquiry Centre. Most offices are open to the public from 8.30am to 5.00pm, Monday to Friday. Addresses are in your local phone book under `Inland Revenue' and at www.inlandrevenue.gov.uk/local

You can get most of our leaflets from our Orderline, seven days a week (except Christmas Day, Boxing Day and New Year's Day) by

  • phone or textphone (for Minicom users) on 0845 9000 404 between 8.00am and 10.00pm
  • fax on 0845 9000 604
  • e-mail at saorderline.ir@gtnet.gov.uk
  • writing to

PO Box 37
St Austell
Cornwall
PL25 5YN.

Your library or Citizens Advice Bureau may also have copies of some of our leaflets, but may not have them all.

We have a full range of services for people with disabilities, including leaflets in Braille, audio and large print. For details, please ask your local Inland Revenue office or Enquiry Centre.

Our Service Commitment to you

The Inland Revenue and Customs and Excise are committed to giving you the best service we can by acting fairly and impartially

We

  • treat your affairs in strict confidence, within the law
  • want you to pay or receive only the right amount due.

Communicating effectively with you

We aim to provide

  • clear and simple forms and guidance
  • accurate and complete information.

Providing good quality service

We aim to

  • handle your affairs promptly and accurately
  • be accessible
  • keep your costs to the minimum
  • help customers with special needs
  • be courteous and professional.

Taking responsibility for our service

We

  • publish our customer service aims and achievements annually
  • want to hear from you if you wish to comment, or complain, so we can improve our service. We advise you how to do this.

We can provide better service if you help us by

  • keeping accurate and up-to-date records
  • letting us know if your personal or business circumstances change
  • giving us correct and complete information
  • paying on time.

Further information on customer service is available at Inland Revenue and Customs and Excise local offices, set out in our Charters, complaint leaflets and Codes of Practice.

These notes are for guidance only and reflect the position at the time of writing.
They do not affect any right of appeal.

Issued by
Inland Revenue Marketing and Communications
December 2003
Ó Crown Copyright 2003

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