Stamp Taxes Bulletin - issue 1
Contents
- Introduction - A welcome from the Editor
- Helping us to help you - a reminder about adjudication procedures
- Setting standards - how we aim to deliver even better service in the future
- When is a fixture not a fixture? - chargeable and non-chargeable items
- stamp duty on goodwill and intellectual property
- How to make the most of your Stamp Office - a guide to our services
- In your interest - news about the recent interest rate changes
- Casting the net wider - latest developments in e-business
- Noticeboard
A welcome from the Editor
Welcome to the first edition of the Stamp Taxes Bulletin, a new publication for customers to help you get the most out of our services and understand your obligations in paying the right amount of tax. It gives you up-dates on all the latest developments, reminds you about technical points and provides background to changes, which have taken place.
We have seen many changes over the past year. In October 2000 the Stamp Office became part of a new business - Stamp Taxes. This brings together the operational, technical and policy areas of our work to help us provide a more 'joined up' service to both customers and Ministers.
The organisation is headed by Craig Lester our new Business Director who took up post in May 2001, and Seb Beck our newly appointed Deputy Director of Operations who is responsible for the running of our local offices.
In this edition we also tell you about our achievements for 2000/01 and the stretching targets we have set ourselves for the year ahead, to improve our business still further.
I hope you will find the Bulletin both interesting and enjoyable to read. It does not however give you all the information you need to work out your stamp duty, and you should still contact us directly for more detailed guidance.
We want the publication to be relevant to our customers, so if you have any comments or suggestions about topics you would like to see covered in future issues please give me a call on 0117 927 3742.
We intend to publish the Bulletin at least twice a year and Issue No 2 is due in January 2002.
Pauline Hudd
Customer Service Manager
Helping us to help you
A reminder about adjudication procedures
For many years we have asked customers to provide a copy of the document when lodging an application for formal adjudication under the provisions of Section 12 of the Stamp Act 1891, This copy is retained by Stamp Taxes after completion of the adjudication. There are recent instances where this has been overlooked by some customers.
Can we remind you, please, to send us a photocopy of all documents requiring adjudication. This will enable us to process adjudication applications swiftly.
Documents sent for straightforward stamping, without adjudication, need not be accompanied by a copy.
Remember you can send your adjudication documents to any of our local offices.
Setting standards in customer service
Stamp Taxes sets itself demanding targets which reflect the high standards of service our customers expect. Last year we were proud to receive our third Charter Mark Award, which puts us among the top organisations in the country for service excellence and "going the extra mile" to help our customers.
We measure our performance in terms of the service the customers actually receive, including the length of time we take to deal with your documents. Provided that you send us the right amount of duty and we have all the information we need, we aim to process and return your documents within 5 working days.
We have continued to deliver responsive services to meet your needs. Last year we extended the availability of our telephone Helpline service which you can ring between 8.30 a.m. and 5 p.m. on weekdays.
Remember, for all general enquiries, call the Stamp Taxes helpline.
We also gave our customers the opportunity to discuss current issues directly with us, by setting up User Groups at each of our locations. If you would like to get involved in these meetings please contact the local Customer Service manager.
Despite a fire at our Newcastle office and the relocation of our offices in Manchester and Edinburgh, we managed to return 96% of all documents in 5 working days. We aim to improve on this still further in the coming year.
We try to keep to a minimum our costs in administering the duty and your costs in complying with the legislation. In 200/01 the cost of collecting stamp duty was the lowest ever, at just 12p to collect every £100 of duty.
Overall the volume of documents processed is showing a decline and this is due to the growth in electronic trading as we move to the paperless dealing system for CREST transactions on the stock market.
Our achievements...
| Stamp Duty |
2000/01 |
2001/02 | |
|---|---|---|---|
| Forecast | Result | Forecast | |
| Documents processed (millions) |
2.70 |
2.12 |
1.98 |
| Duty collected (£ millions) |
3,951 |
4,375 |
4,271 |
| Documents processed in 5 days |
99.1% |
96.5% |
99.1% |
| Cost of collecting £100 of duty |
13 pence |
12 pence |
15 pence |
| SDRT | 2000/01 |
2001/02 | |
|---|---|---|---|
| Forecast | Result | Forecast | |
| Tax collected (£ millions) |
3255.40 |
3884.20 |
3750 |
| Cost of collecting £100 of tax |
2 pence |
2 pence |
2 pence |
When is a fixture not a fixture?
Deductions for chattels (or moveables in Scotland)
Where the consideration for the conveyance or transfer on sale of a property includes an amount attributed by the parties to chattels (or moveables in Scotland), that amount will not normally be charged to stamp duty provided the chattels pass by delivery and are not conveyed in the document.
Case law provides that where assets of different character are agreed to be sold for one consideration for the whole, an apportionment between the chargeable and non-chargeable property must be a bona fide one. This is taken to mean that it must be based on the commercial value of the property concerned. A contract for sale based on a false apportionment may be unenforceable because of its improper intent and can therefore have more far-reaching consequences.
Over the last year or so, Stamp Taxes has seen a steady increase in the number of cases where the amount of consideration attributed to items claimed to be chattels is more than a small percentage of the total consideration. This is especially the case where this brings the chargeable amount just below the £250,000 or £500,000 thresholds.
Customers should note that in cases where it appears that an excessive amount of the consideration has been artificially attributed to non-chargeable items a full inventory and breakdown of the consideration will be requested by Stamp Taxes. This is to ensure that all the items claimed as chattels are properly within that description and that the allocation of the consideration is bona fide and not in breach of Section 5 of the Stamp Act 1891.
Stamp Taxes does not provide a comprehensive list of items which are accepted as chattels or moveables since many cases need to be considered on their own merits and case law is evolving in this area all the time. However items which will generally be accepted as chattels or moveables include - carpets, curtains, light shades, pot plants, free-standing kitchen white goods and portable electric or gas fires.
Items which are generally unacceptable as chattels are - Fitted kitchen cabinets and cupboards, fitted kitchen white goods, fitted bathroom sanitary ware, central heating systems, plants growing in the soil, central heating systems and gas fires connected to a piped gas supply.
Loose plant and machinery
Plant and machinery may in certain circumstances be treated as "goods, wares and merchandise" and will then fall within the exception to the charge to stamp duty under Paragraph 7, Sch 13, Finance Act 1999.
The requirement for plant and machinery to be in an actual state of severance at the date of the agreement for sale for it to fall within the "goods, wares and merchandise" description is an historical one. It stems from case law based on circumstances involving mortgagees in possession. The two main tests as to whether plant and machinery constitutes goods, wares and merchandise are essentially the same as for chattels, namely (1) the degree of annexation to the building or land and (2) the purpose or object of annexation. Stamp Taxes has for many years required customers to certify that plant and machinery claimed as loose plant must be in an actual state of severance if it is to be considered as goods and therefore outside the charge to duty on an agreement for sale. We will no longer insist upon this certification being given.
Where it would be possible for plant and machinery to be relatively easily severed from the property to which it is fixed, say for example by the simple expedient of removing some bolts securing it to the floor or walls, we will no longer insist that this is actually done before it will be considered to be 'loose plant and machinery'.
The position in law has not changed nor does this mean that all plant and machinery suddenly falls within the exception. As in the past, the consideration attributed to fixed plant will be chargeable to stamp duty on the agreement for sale document. Heavy plant and machinery which is integral to a building and plant where its removal would damage the building or land will still be considered fixed plant. This will be particularly relevant in respect of plant such as, for example, escalators and elevators, boilers, furnaces, walk-in refrigerators and restaurant cooking stations, none of which would be likely to be classed as loose plant for stamp duty purposes. Each case will be considered on its own merits. The Stamp Taxes form Stamps 22 will be amended to reflect this new treatment. The equivalent forms used in Scotland and Northern Ireland do not require amendment since they did not previously include the certification requirement.
Archie Brown - Technical Adviser
Stamp Duty on goodwill and intellectual property
With the rapidly changing face of today's business world and the growth of new technology, there are now many different types of assets relating to the trade of a company.
We are receiving an increasing number of enquiries about certain types of 'intellectual property' relating to computer applications.
This is a brief outline of what is and isn't chargeable.
Intellectual property including: -
- Domain names
- Databases
- Software applications
All these are not chargeable.
- Goodwill - Traditionally this refers to the rights associated with carrying on the business, the "good name" and established reputation which brings with it the promise of trade.
Business goodwill is chargeable with stamp duty.
However, if the goodwill is derived from intellectual property, for instance, it is associated with a trademark, then it is exempt from duty under s.129 (2) Finance Act 2000.
- 'Know - how' is not chargeable with stamp duty
How to make the most of your Stamp Office
A guide to services
We have offices in 8 locations throughout the U.K, in Belfast, Birmingham, Bristol, Edinburgh, London, Manchester, Newcastle and Worthing.
All of our offices offer a comprehensive range of services including the facility for dealing with adjudication matters, such as charity exemptions and inter-company relief.
You can send your documents, including those requiring formal adjudication to any of our local offices.
Our London office provides a counter-only service for personal callers. Any postal applications should therefore be sent to one of our other offices.
Don't adjudication documents have to be sent to Worthing?
No. You can send adjudication applications to any office.
Although in the past, Worthing was our main adjudication centre, where claims for exemption and special relief had to be sent. For some time now this service has been available in local Stamp Offices throughout the country and you should send adjudication documents to the office that you normally use for all your general stamp duty applications.
What if I need help on a technical point?
We have technical advisers in each of our offices, who can provide you with information and guidance on more complex issues and explain the procedures for making an exemption claim.
On more general matters, the Stamp Taxes Helpline operators are available to assist you in answering your basic stamp duty enquiries.
Where do I find out more?
If you want to know more about a specific subject, we publish a range of leaflets covering different topics. These are available free of charge from any of our offices. They can also be found on the Internet.
To find out what's new and all the latest developments visit the Stamp Taxes area.
In your interest
News about recent interest rate changes
In line with other taxes, we charge interest on late payments of stamp duty. This is aimed at making sure the tax operates fairly for all our customers by encouraging everyone to pay us the right amount of duty on time.
We also pay you interest in certain circumstances. If you pay more duty than is due and your document is over-stamped we will add interest to the repayment amount. The interest charged on late paid tax is higher than that added to repayments.
The interest rates for stamp duty, like those for other taxes are set by reference to changes in the base rate.
New rates of interest came into effect from 6th May 2001.
This table gives you a quick guide to recent changes in the rates of interest.
| Date | Late paid duty | Repayments |
|---|---|---|
| 1/10/99 | 7.5% | 3% |
| 6/2/00 | 8.5% | 4% |
| 6/5/01 | 7.5% | 3.5% |
If the delay crosses over periods where different interest rates apply, we will charge interest at the old rate for any period prior to the rate change, and at the current rate for any subsequent period.
Casting the net wider....
Developments in e-business
More than 25% of our customers regularly access our web-site to find out all the latest information and news about stamp duty changes.
We receive a number of suggestions from customers about the things they would like to see on the web. In particular, our Northern Ireland users said they would like an electronic version of the form PD1 (PDF 7K) to be available on-line.
We responded by including this on our web-site.
We are also working hard to make sure that every contact with our customers counts, enabling them to understand and meet their obligations in paying the right amount of duty.
To help customers find their way around our forms, we have recently incorporated a "help" feature on our form Stamps 61 on the web-site. This guides the reader through the various sections, telling them what information to include. We are intending to extend this facility to all our forms in time, and we are currently working on a "help" index for our form LA451 to give guidance in completing the information. This will replace the printed information on completing our forms, which was available in the SO5 leaflet.
Noticeboard
This section tells you about the latest Stamp Taxes publications, and highlights recent information.
Did you see…
- Stamp Taxes Customer Newsletter - Interest & Penalties - Interest Rate Charges May 2001
- Stamp Taxes Customer Newsletter - Penalties & Interest
- further guidance on calculating
penalties in cases over 1 year late Feb 2001
Internet announcement
- Stamp Duty Reserve Tax and Individual Pension Accounts (IPAs)
- Unit Trusts and Open Ended Investment Companies (OEICs)
Stamp Office addresses
Birmingham Stamp Office
9th Floor
City Centre House
30 Union Street
Birmingham
B2 4AR
0845 603 0135
DX: 15001 Birmingham 1
Bristol Stamp Office
The Pithay
All Saints Street
Bristol
BS1 2NY
0117 927 2022
DX 7899 Bristol 1
Edinburgh Stamp Office
Grayfield House
Spur X
4 Bankhead Avenue
Edinburgh
EH11 4AE
0131 442 3161
Dx: ED 543303 Edinburgh 33
Manchester Stamp Office
Upper Fifth Floor
Royal Exchange
Exchange Street
Manchester
M2 7EB
0161 834 8020
DX: 14430 Manchester 2
The content of Stamp Taxes Bulletin gives the views of our technical specialists on particular issues. The information published is reported because it may be of interest to tax practitioners. Publication will be twice a year.
- You can expect that interpretations of the law contained in the Bulletin will normally be applied in relevant cases, but this is subject to a number of qualifications.
- Particular cases may turn on their own facts, or context, and because every possible situation cannot be covered, there may be circumstances in which the interpretation given here will not apply.
- There may also be circumstances in which the Board would find it necessary to argue for a different interpretation in appeal proceedings.
- The Bulletin does not replace formal Statements of Practice.
- The Board's view of the law may change in the future. Readers will be notified of any changes in future editions.
Nothing in this Stamp Taxes bulletin affects a taxpayer's right of appeal on any point.
