Law Society’s reaction to SDLT reform
Whilst generally welcoming the reduced payment windows for stamp duty land tax (SDLT), the Law Society and City of London Law Society have warned that unless certain exemptions are permitted, errors may creep in.
The change, proposed by HM Revenue & Customs (HMRC), suggests a reduction from 30 to 14 days for the SDLT filing and payment window. This consultation was closed on 7th October.
Both Societies expressed that circumstances were bound to occur where the 30-day window should be applied, despite the initial view that the reduced period would be best where transactions were straightforward. For example, where the transaction involves a calculation of a consideration to be paid in the future, or if transactions involve a large number of properties and occupational leases or if the entirety of part of the consideration to be payable is uncertain or contingent.
Adding that the time limit being reduced “could well result in errors… as well as incorrect payment of the SDLT” was the City Society.
In stating the availability of information necessary to defer should only be applied to those close to the effective date was the Law Society. They suggested that the 14-day period may thus be insufficient, “especially at times of the year when there are public holidays”. Where an application is made in regards to a contingent or uncertain sum, the Society also adds that retaining the current 30-day period should be considered.
HMRC is also suggesting that all agents file online returns, as part of their consultation.
The Law Society commented that HMRC should make allowances through extension of time limits for solicitor and HMRC communication, as well as permitting exception for “complex transactions”.
They also added that mandating electronic payment is “required to change payment behaviours” in light of the continued use of cheques being “surprisingly high”. A transitional period of six months to a year has been suggested also, in which paper or electronic methods are acceptable.
According to Chancery Lane, the prominent issue for members in terms of SDLT continues to be the “excessive amount of information required” which had been “stated many times previously”. This is in regards to letting documents that has “nothing to do with the notifiable transaction”. They similarly stated that such information was primarily for Valuation Office Agency purposes. It continued that mandatory online filing would be a means of increasing efficiency in stating: “HMRC and VOA should reinforce their efforts to focus on ways of reducing the information required to be provided”.
If such a change to the SDLT window was carried out, it would come into force during the 2017-18 tax year.