Stamp duty payment window cut to 14 days from 2018

Plans to reduce the stamp duty land tax (SDLT) filing and payment window to 14 days in the 2017-18 have now been fleshed out by HMRC although a fixed timetable has not been agreed

HMRC has issued an eight-week consultation on plans to cut the payment window for SDLT from 30 to 14 days although this would not come into force until 1 January 2018 at the earliest.

The change to the payment period was first mooted in the Autumn Statement in 2015. From HMRC's perspective, the plans are supposed to simplify the current system and introduce a more streamlined approach, although it does accept that there will be additional admin costs for businesses and individuals initially.

Currently, a purchaser has to submit an SDLT return (SDLT 1) to HMRC and pay any SDLT due within 30 days after the effective date of the transaction, usually completion. Once the transaction is filed online, each return is allocated an 11-character unique transaction reference number (UTRN). 

The system is not integrated at the moment so the payment has to be made after the transaction filing notice has been acknowledged by the HMRC portal and a UTRN has been generated, which creates a payment reference number.

At the moment, an individual who is not filing through an agent cannot use the HMRC online filing service and therefore has to file on paper, potentially delaying the process as they have to wait for a mailed copy of the UTRN which is accompanied by a payslip. There are plans to review whether individuals could use the online filing system from 2018. This is a very small element of the market, only accounting for around 500 transactions a year.

The proposals to change the payment window depend on upgrading the current IT system, but HMRC is aiming to complete the transformation work by 1 March 2018.

This measure will impact principally on businesses (mainly licenced conveyancers and solicitors) who act for individuals and companies in submitting SDLT returns and payments on their behalf. Approximately 20,000 agents are involved in the submission of SDLT returns and payments.

In cases where the sum payable for a property is contingent or uncertain, SDLT payers wishing to apply for deferment of SDLT would have to do this within the 14 days. There are no plans to amend other provisions in the SDLT legislation which contain a 30-day time limit, for example where a transaction becomes notifiable or additional tax becomes payable.

At the same time, it has set out changes to the SDLT filing and payment process to make it mandatory for agents to submit SDLT filing online, which could be accompanied by a penalty system where agents fail to use the online system.

It also wants to make all SDLT payments electronic, through a mandatory requirement, with no provision for cheque payments, other than in exceptional circumstances.

In terms of the proposed timetable, the aim is to introduce the system in the 2017-18 tax year although HMRC says ‘this may not be possible’ due to IT constraints.

Despite instances of SDLT fraud, HMRC has not set out any plans to issue property sellers with a certificate of payment.

It is also reviewing whether it would be possible to merge the filing and payment of SDLT into an integrated system, whereby the transaction could be registered and direct debit (DD) details could be entered for subsequent payment.

To reassure customers, HMRC says that the DD would only be used on a one-off basis for the SDLT charge. The consultation document states: ‘HMRC could only use the direct debit details provided to collect the SDLT due on that return.’

Currently, 97% of SDLT returns are filed online (about 1.3m returns annually). About 70% of payments are made electronically, with about 30% (250,000) paid by cheque.

SDLT is chargeable on acquisitions of land in England, Wales and Northern Ireland, with second home owners and buy-to-let acquirers subject to a 3% SDLT levy on standard rates.

This consultation document seeks views on proposed changes, their design and implementation.

The closing date for responses is 7 October 2016 at 11.45pm.

Stamp duty land tax: changes to the filing and payment process consultation is available here

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