Guidance

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

Time limits

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

Keep records of each SDLT transaction, and include any information such as:

  • contracts
  • conveyances
  • any maps, plans or other documents
  • payments
  • receipts
  • 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.

If you’re making an amendment because you’ve underpaid SDLT, pay the additional amount immediately as interest is due from the date SDLT was payable.

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

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.

Appeals

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.

Published 6 June 2014