In this section:
- Stamp Duty Land Tax (SDLT): the basics
- Stamp Duty Land Tax rates and thresholds
- Stamp Duty Land Tax for different types of transaction
- Stamp Duty Land Tax reliefs and exemptions
- Completing and filing the Stamp Duty Land Tax Return
- Stamp Duty Land Tax filing deadlines and payment
- Amending an SDLT return or certificate
- HMRC enquiries into SDLT returns
HMRC enquiries into SDLT returns
HM Revenue & Customs (HMRC) wants to ensure that everyone who pays Stamp Duty Land Tax (SDLT) pays the correct amount and that the system is working effectively. They therefore sometimes make enquiries into returns.
This guide explains the circumstances in which an enquiry might be opened into an SDLT return. It also outlines the possible outcomes and tells you what you can do if you don't agree with the result, and provides links to more detailed guidance.
On this page:
- Why HMRC enquires about SDLT returns
- Timing of SDLT enquiries
- What to expect during the enquiry
- Your right to amend an SDLT return during an enquiry
- The outcome of an SDLT enquiry
- Paying SDLT after the enquiry
- SDLT enquiry appeals or complaints
Why HMRC enquires about SDLT returns
HMRC doesn’t check all SDLT returns when they are submitted - they accept that most returns are completed accurately and the correct amount of tax calculated and paid. However they do review some returns after they are submitted, to check for accuracy and completeness. If a mistake comes to light (for example if the rate of SDLT you have paid appears to be wrong) HMRC will start an enquiry.
The purpose of the enquiry is to:
- understand your transaction in more detail
- check for accuracy
- make sure the system is working as it should
In addition, a number of transactions are also selected for an enquiry on a random basis - so an enquiry into your transaction may not mean that HMRC thinks there is anything wrong.
Any repayment due or tax owed will be repaid or requested from you at the end of the enquiry.
Timing of SDLT enquiries
HMRC can open an enquiry at any time during the nine months following the SDLT filing date - this is 30 days after the effective date of the transaction (normally the completion date). If you send the SDLT return in late, the nine months starts on the date the return is received. After this time HMRC cannot usually open an enquiry unless some new information comes to light.
What to expect during the enquiry
Information you’ll need to provide
HMRC will write to you - and your professional adviser if you have one - if they intend to open an enquiry. They will tell you what they need from you and what your rights are.
You'll need to provide any information required within a reasonable time - usually 30 days. If for any reason you can't meet this deadline, let HMRC know why and they will allow you more time if it's reasonable. Any records that you provide will be returned to you. Alternatively, HMRC may be able to agree to examine records at other locations such as your business premises or your solicitor’s office.
During the course of the enquiry you can continue to use the agent named on your SDLT return to deal with HMRC for you.
Bear in mind that HMRC can use legal powers to obtain information if you don’t provide it when requested.
Arranging a meeting with HMRC
In some cases HMRC may want to meet you to discuss the transaction and the information you’ve provided. In these circumstances they will tell you in advance what they need to know more about. A professional adviser, friend or relative can accompany you to any meeting.
Your right to amend an SDLT return during an enquiry
If an enquiry has already started and you realise that something is wrong or was missed off an SDLT return in error, you can still amend it within 12 months of the filing date. However in this case, if the correction means you are due a repayment this won’t be paid until after the enquiry has finished.
If you are making an amendment because you realise you have underpaid SDLT you should pay the additional amount immediately as interest will be due from the date SDLT was payable.
Find out more about making an amendment to your return
Find out about interest charges on late SDLT payments
How to pay Stamp Duty Land Tax
The outcome of an SDLT enquiry
If the enquiry finds the SDLT return is correct
If an enquiry concludes that the return was completed accurately and the correct amount of tax paid, no changes will be made to your return.
If the enquiry finds the SDLT return is incorrect
If the enquiry finds that you paid more SDLT than was due, HMRC will
repay the amount overpaid and pay interest from the date of your payment
of SDLT.
If it finds that you haven't paid enough tax - for example, because
you claimed a relief that wasn’t due or reclaimed too much relief, or
some other reason - HMRC will suggest changes you need to make to the
return and why. They will also explain how much you underpaid and how
they have reached the calculation.
In this case you’ll have to pay interest on any amount outstanding, so the sooner you make the payment the better.
You may also have to pay a penalty if either of the following applies:
- you filed your return late
- the amount on the return was understated and the error is due to your negligence
The enquiry ‘closure notice’
At the end of the enquiry you'll get a letter called a closure notice confirming that the enquiry has finished and what the final result is.
Paying SDLT after the enquiry
HMRC will ask you to pay any Stamp Duty Land Tax due on an amendment to your SDLT return within 30 days of receiving the closure notice for the amendment. You should pay the tax as soon as possible.
Fixed penalties for late payments or late amended returns
If you send in your amended return and payment later than 30 days after the closure notice but within three months of the 30-day limit, you will automatically be charged a £100 penalty. In all other cases, you will automatically be charged a £200 penalty. If you pay late, you will also have to pay an interest charge.
Tax-related penalties for incorrect returns
HMRC only seeks penalties for incorrect returns if SDLT is understated and the error was due to negligence or fraud. These penalties are based on a proportion of the tax understated. When working out any penalty they take into account:
- whether you voluntarily disclosed anything that was wrong
- your help in concluding their enquiries
- the seriousness of your errors or omissions
For example, if they asked you to attend a meeting but you chose not to and, as a result, the enquiry took longer to settle than was necessary they may take the delay into account when working out the level of penalty.
How to pay enquiry settlements
SDLT enquiry appeals or complaints
If you think an enquiry should stop
You can ask HMRC why they are continuing an enquiry, if you believe:
- HMRC’s conclusions or any amendment they make to your SDLT return
- they have had enough time to consider the information and explanations
They will reconsider the matter to see whether they can agree to end the enquiry. If they can’t they will explain what further information they need.
If you don't think they have any grounds for continuing, you can ask the Appeal Commissioners to consider whether the enquiry should be closed. You can read more detail in our guides under ‘More useful links’ below to find out more.
If you disagree with an enquiry’s findings
If you disagree with the enquiry findings you have the right to appeal. You can appeal to independent Appeal Commissioners within 30 days of the issue date against:
- HMRC’s conclusions or any amendment they make to your land transaction return
- any other assessment they make that you do not think is correct
You can find out how to appeal by reading the notes with the amendment or assessment, or by asking HMRC to explain the process to you.
Find out more about SDLT enquiries for individual SDLT returns
SDLT enquiries in company and partnership land transaction returns
