Stamp Duty Land Tax: HM Revenue and Customs compliance checks
HMRC may check your Stamp Duty Land Tax (SDLT) return to make sure you've paid the right amount.
Why HMRC check SDLT returns
HMRC know that most returns are filled in correctly and the right amount of tax is calculated and paid. But they do check some returns after they’re submitted. The reason for this is to:
- understand your transaction in more detail
- check for accuracy
- make sure the SDLT system works as it should
The check doesn’t mean that HMRC think there’s anything wrong.
If you think your SDLT return is wrong
If you think that there’s something wrong on your SDLT return, tell HMRC as soon as possible. If you don’t, it may mean you’ll have to pay more. Read CC/FS9 The Human Rights Act and penalties factsheet before contacting HMRC.
What HMRC check
HMRC will write or phone to tell you they want to check your land or property transaction return.
If you use an agent, HMRC will contact them as well.
When HMRC contact you, they’ll:
- tell you what they need from you
- give you enough time to give them the information
HMRC normally has 9 months from the filing date to tell you that they’re starting a check. They’ve got longer if you’ve changed your tax return because either:
- you have new information
- the information you gave was misleading
Information you provide
You can help end the check sooner by giving HMRC the information they ask for as soon as possible. If you can’t meet a deadline, tell HMRC why and they may allow you more time. Any records that you give will be sent back to you.
If you don’t give HMRC the information they need, they may make a formal request. If you get a formal request, reply quickly or you may have to pay a penalty.
You can carry on using an agent to deal with HMRC on your behalf while they check your return. But, even if you have an agent, you’re personally responsible for your own tax affairs. Make sure all the information your agent gives to HMRC is accurate.
Keep records of each SDLT transaction, and include any information such as:
- any maps, plans or other documents
- details of any financial arrangements
Keep your records for at least 6 years from the effective date of the transaction.
If you don’t keep adequate records or you don’t keep your records for the required period of time, you may have to pay a penalty.
Meet with HMRC
HMRC may want to meet you to discuss the transaction and the information you’ve given. They’ll tell you in advance what they need to know more about. You can bring a professional adviser, friend or relative to any meeting.
Amend your return during a compliance check
If HMRC have started a compliance check and you realise something’s wrong or missed off your SDLT return, you can still amend it within 12 months of the filing date. If the correction means you’re due a repayment, you won’t be paid until after the compliance check is finished.
After the check
If nothing’s wrong, you’ll get a letter telling you the check’s finished (closure notice). In this case there won’t be any changes to your SDLT return.
If you’ve paid too much tax, HMRC will change your SDLT return to show the right figures and you’ll get a repayment. In some cases you’ll also get interest on the amount you overpaid.
If you’ve tax to pay, HMRC will send you a decision telling you:
- how much you’ll have to pay
- how it’s been worked out
- when you have to pay it
You may have to pay interest if the tax should have been paid earlier, as well as a penalty.
Penalties for inaccurate returns
There are different penalty rules depending on when the SDLT return was due to be filed.
HMRC will consider penalties if the inaccuracy is because of careless or deliberate behaviour. When deciding the amount of the penalty, they’ll consider:
- the extent to which you disclose any inaccuracy in full and explain how and why it arose
- how helpful you’ve been in quantifying the inaccuracy
- how helpful you’ve been during the check
HMRC will consider penalties if the inaccuracy arose as a result of negligent or fraudulent conduct. The amount of the penalty will take into account:
- the extent to which you disclose any irregularities
- how much you co-operate with the check, which includes fully and freely giving HMRC the information and documents requested
- the seriousness of the offence
Fixed penalties for late amended returns
If you send in your amended return more than 30 days after the closure notice but within 3 months of the 30-day limit, you’ll be charged a £100 penalty. In all other cases, you’ll be charged a £200 penalty.
If you pay late, you’ll also pay an interest charge.
Pay amounts due as a result of the check
HMRC will try to agree the total amount due with you. If they charge you penalties, they’ll either finalise the check with a contract, or by telling you the decisions. They’ll either:
- amend your return
- issue an assessment for the tax and any penalty and, send you details of the tax, interest and penalty arising
Ask HMRC to stop a check
You can ask HMRC why they’re continuing with a compliance check, if you believe:
- you’ve given all the information and explanations they need to check your SDLT return
- they’ve had enough time to consider the information and explanations
If you think HMRC should stop the check, tell them why. If HMRC don’t agree, you may be able to ask the independent tribunal that deals with tax matters to decide whether the check should stop.
If you disagree with the decision, write to HMRC within 30 days of the date of the decision. Tell them why you think it’s wrong. If you can’t agree you’ll be able to ask for a review by a HMRC officer who’s not been involved in the case before. You’ll also have the right to go to an independent tribunal.
You can make an appeal against SDLT decisions on:
- HMRC’s amendment to your SDLT return
- any other assessment they make that you don’t think is right
- a penalty you’ve been charged
Full details of how to appeal will be included with the amendment or assessment.