Stamp Duty Land tax (SDLT) Practitioners’ News (formerly Newsletter) Issue 12 - August 2006

Late Filing Penalties

We are still receiving an exceptionally high volume of appeals against late filing penalties.

Late filing penalties are only waived in cases where a reasonable excuse for the late submission of the land transaction return exists - Finance Act 2003/ Chapter 14 Part 4 S97.

Any excuse will be considered in the context that the purchaser was presumably able to instruct an agent to do what was necessary to complete the land transaction whilst the sale was ongoing and therefore they would also be able to instruct an agent to do what was necessary with regard to the submission of the land transaction return. It would have to be some exceptional event that did not prevent completion of the land transaction but did prevent submission of the return.

In respect of all taxes administered by HMRC including SDLT, we do not accept that failure by the purchaser’s agent to do something gives the purchaser a reasonable excuse. If a purchaser leaves the submission of a return to an agent who then fails to deliver it on time, we will still regard the purchaser as responsible. The purchaser could and should have ensured timely delivery.

In addition we would advise purchasers not to merely "sign and forget" blank SDLT Returns. Even if it is sensible and practical for a purchaser to sign the return before it is finished, then he/she is still responsible for the accuracy of his/her return and the declaration that it is correct and complete, and for its timely delivery to us.

HMRC’s view is that any reasonable excuse depends on some exceptional event beyond the purchaser’s control that has prevented them from:

  • sending back a completed land transaction return to us, or
  • making other arrangements to do this by the deadline.

Examples of what we may agree as a reasonable excuse are as follows:

Lost or delayed in the post

Purchasers should allow sufficient time for their land transaction return to reach us by the due date (within 30 days of the effective date). However, where it was posted in good time, we would agree as a reasonable excuse an unforeseen event, which disrupted the normal postal service and led to the loss or delay of your land transaction return. For example

  • fire or flood at the Post Office where the land transaction return was handled, or
  • prolonged industrial action within the Post Office or other document carrier, which occurred after the land transaction return had been posted to us or delivered to the document carrier for transmission to us.

Serious illness of the adviser

We would agree that serious acute illness, such as a heart attack, stroke, or other life threatening condition that prevented a purchaser’s adviser from controlling his or her business and private affairs is a reasonable excuse.

Death of the adviser

We would agree that the death of the adviser dealing with the land transaction return is a reasonable excuse.

Extra time beyond the 30 day limit imposed by Finance Act 2003/ Chapter 14 Part 4 S76.

It is sometimes claimed that extra time has been allowed for the completion of a return where a duplicate return form has been submitted bearing a current date and that form is fully completed within 30 days - Finance Act 2003/ Chapter 14 Part 4 S82, see Stamp Duty Land Tax Manual at SDLTM86500 - Compliance: Penalties states that if the original land transaction return has been lost, destroyed or damaged so as to be illegible or useless HM Revenue & Customs will treat the land transaction return as not having been delivered.

There is no provision in Finance Act 2003 granting the purchaser extra time to resubmit a replacement land transaction return.

Reasonable excuse ceased

When the circumstances causing the reasonable excuse cease the position must be remedied immediately - Finance Act 2003/ Chapter 14 Part 4 S97 (2)(b).

Further information is available in our SD7 leaflet ‘Stamp Duty Land Tax - Penalties for late land transaction returns (PDF 57K)’, and in the Stamp Duty Land Tax Manual at SDLTM 86460.

It should be noted that in the absence of a reasonable excuse late filing penalty appeals, not otherwise resolved, will be listed for a hearing before the General Commissioners.

Errors made which result in SDLT penalties being charged

To assist practitioners, we have identified the following circumstances as the main errors made resulting in SDLT penalties being charged:

  • Incorrect effective date entered - the effective date is normally the completion date of the transaction, whether or not a document shows this. However, if a contract is substantially performed before completion, the date that ‘substantial performance’ takes place is the effective date.
  • When to use an SDLT1 or an SDLT60 - the only circumstances where a transaction can be self-certified to the appropriate land registry using form SDLT60 rather than submitting an SDLT1 Return are shown on page 2 of the SDLT60 form (PDF 38K).
  • Practitioners and purchasers waiting until all documentation is returned from local council offices etc. before submitting an SDLT1 Return - This causes unnecessary delays as we do not require any such documentation to be sent in with the return, which should be submitted as soon as the transaction is concluded.
  • Purchasers not being made aware by the practitioner of the need to submit the SDLT1 Return to us within 30 days of the effective date of the transaction.

We would like to remind practitioners that SDLT8 requisition queries can be dealt with over the phone by our Helpline on 0845 6030135.