Since it replaced the centuries old Stamp Duty in 2003, Stamp Duty Land Tax has become one of the UK’s most complex taxes.
Within 14 days of completion of any significant property transaction, it is the responsibility of the buyer or leaseholder to file a stamp stamp duty land tax return and pay any applicable duty on the transaction. This is usually uploaded electronically by the conveyancer who completed the purchase, save that legal responsibility for ensuring that everything contained within the return is correct and that the correct duty is paid, is placed firmly on the client-purchaser, not the conveyancer who acted on the purchase.
In terms of complexity, a stamp duty land tax return can be compared with any complex self-assessment tax return. And it is the responsibility of the taxpayer to get it right as in most cases, HMRC take the information provided on trust unless there is something specific which raises query.
Most purchaser – clients are not tax experts and will rely on the advice given by their conveyancer as to how much stamp duty land tax they will be required to pay. However they must still make sure that the information they provide to the lawyer is correct, particularly as regards any second homes. Once the client has seen and approved the draft stamp duty land tax tax return, the conveyancer will upload it on the HMRC portal. Almost instantaneously, that conveyancer will receive back an electronic certificate in form SDLT5, confirming that the stamp duy tax return has been uploaded and received, even if the duty itself has not yet been paid. It is that SDLT5 which will then enable the conveyancer to register the transaction and pay the stamp duty from money held on account from the particular client. There are also some cases involving trusts, where the issues are so complex, that the conveyancer should advise their client to seek specialist tax advice before approving the stamp land tax return for upload.
Because of the complexity of some conveyancing transactions, there is always a risk of miscalculating the amount of duty chargeable on a particular transaction. The risk applies both ways. There’s firstly the risk that you may overpay stamp duty on a transaction because your conveyancer has not identified a legitimate relief to which you are entitled. Or you may accidentally fail to declare something which would otherwise have had the effect of increasing the tax liability which would otherwise be payable. Either way, the mistake is expensive.
BRUCE AND HOLLY 