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SDLT1 should be received by HMRC by the ‘filing date’, which is normally
30 days after the effective date of the transaction (which will usually be the completion date). Obviously, if the contract is ‘substantially performed’
before completion then the date when that ‘substantial performance’ takes
place will become the effective date. In general, substantial performance is
when payment of a substantial amount of the consideration (typically 90%) is
made; or the purchaser takes possession; or the first payment of rent is made;
or an optional right of pre-emption is acquired.
The key point is that if the SDLT1 is not submitted by the filing date then a
£100 fixed penalty will be charged. That £100 increases if the SDLT1 is over
120 days late, in which case it becomes £200. If it is over 12 months late then
a tax-based penalty is charged (up to 100% of the SDLT due).
You can appeal (within 30 days of the penalty notice) if there are ‘exceptional
circumstances’. But this is narrowly interpreted (eg exceptional postal delays
such as fire, fl ood, or industrial action at the post office, or the serious illness
or death of the solicitor). Not surprisingly, it does not extend to arguments
based on the complexity of the transaction; pressure of work; delay in
receiving funds; delay in receiving formal valuation; delay caused by the other
side’s lawyers; or delay caused by a party being abroad.
These rules on penalties are, of course, totally distinct from the rules on
interest. That is a separate charge and is always applied when SDLT is not paid
on time (ie interest runs from 31 days after the effective date and is charged
at 7.5%). © Practical Lawyer
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July 2008 |
