When Chancellor Philip Hammond delivered his Budget at the end of October 2018, only the shrewdest legal scholar would have turned immediately to Part 2, Paragraph 21 of the draft Finance Bill 2019. Tucked away in several hundred pages of legislative amendments was a small change which will arguably have more of a practical impact on property transactions in England and Wales that the rest of the Budget put together.
On 1 March 2019, the deadline for filing a Stamp Duty Land Tax (“SDLT”) return and paying the SDLT monies due will drop from 30 days to just 14 from the ‘effective date’ of the transaction. In most cases, the ‘effective date’ is the date you complete a lease or a transfer of land. One of the most frequent exceptions to this rule is when a buyer ‘substantially performs’ the contract in advance of completion, for example by taking early occupation in order to carry out works. The deadline for SDLT should always be taken into account if a tenant or buyer is getting early access to a property.
It was the Finance Act 2003 which set down the deadline of 30 days from the ‘effective date’ of the transaction to pay SDLT. The vast majority of SDLT payments were at that point made by cheque, enclosed with the paper return and sent in the post to HMRC. Fast forward 16 years and the position has changed completely – most practitioners now submit their SDLT return online, sending the monies due by bank transfer. There really is no need for a 30-day deadline in 2019.
A cynic might suggest that the Government hopes to catch out more than a few buyers and tenants with this change, as if the 14-day deadline from the ‘effective date’ is missed there is an automatic £100 penalty to pay to HMRC, along with late payment interest. If the return is filed over three months after the 14-day deadline, then the fine is £200. If the return is a year or over a year late, then HMRC can charge a penalty of up to 100% of the SDLT premium.
An experienced solicitor is unlikely to slip into the realms of 100% penalties due to the 14-day change, but a two-week summer holiday or a busy Christmas period could certainly mean a few unwelcome £100 fines if they are not on top of their post-completion matters. Another reason at least for both clients and solicitors to remember that once the matter completes, there are still potential financial liabilities outstanding.