Stamp Duty: penalties, appeals and interest
When and how late submission penalties and late payment interest are charged and actions to take if you disagree.
Deadlines and penalties
If you have to pay Stamp Duty, you must get your documents stamped by HM Revenue and Customs (HMRC) within 30 days of when they were signed and dated (‘executed’). You may have to pay a penalty and interest if you don’t. If your documents were executed abroad, you have 30 days after first receiving them in the UK to get them stamped. You must confirm in writing the date the documents were received in the UK.
Late submission penalty amounts
The following penalty amounts apply to all documents submitted late for stamping on or after 1 October 2014:
|Length of delay||Amount of penalty|
|Documents late by up to 12 months||10% of the duty, capped at £300|
|Documents late by 12 to 24 months||20% of the duty|
|Documents late by more than 24 months||30% of the duty|
For example, if you paid £20,000 for shares using stock transfer forms, but submitted them for stamping 13 months after they were signed and dated (‘executed’), the minimum penalty would be £20 (duty charged at 0.5% of £20,000 = £100. 20% of £100 = £20)
You’ll have to pay the penalty as well as the Stamp Duty that’s due.
HMRC won’t charge a penalty that’s less than £20.
Penalty amounts will be rounded down to the nearest multiple of £5.
For delays of 12 months or more, the penalty rate may be higher if there is evidence that the failure to submit documents for stamping was deliberate. The more serious the reason, the greater the penalty can be, calculated as a percentage of the duty unpaid.
There’s more information in HMRC’s Stamp Taxes on Shares manual.
When a penalty may be cancelled
HMRC will only cancel a penalty if you have a reasonable excuse for submitting your documents late.
Some examples of a ‘reasonable excuse’ include:
- you can show that you posted your documents in good time, and that due to industrial action at the Post Office or other document carrier they were lost or delayed
- the original document was destroyed beyond use in your solicitor’s office due to fire, flood or another natural disaster
- your solicitor suffered a serious illness which prevented them from controlling their business and private affairs
- your solicitor died
HMRC will consider each case on its own merits.
When a penalty won’t be cancelled
Some examples of excuses that HMRC won’t accept as reasonable include:
- your solicitor was waiting for you to pay the Stamp Duty, or another solicitor was due to pay it
- you were waiting for a valuation - in this situation you should send in your documents while the valuation is being decided
- the delay was caused by the vendor’s solicitor
- there was a disagreement between your solicitor and the vendor’s solicitor
- you were abroad and couldn’t sign the documents - in this situation you should arrange a Power of Attorney so that someone else can sign on your behalf
- the documents were held by another government department, for example the Land Registry
If the reason for the delay was a personal one, HMRC won’t accept it as reasonable if it didn’t prevent you from dealing with your other affairs.
Stamp Duty late payment interest charges
If you don’t pay the full amount of Stamp Duty on time you’ll have to pay interest from the day after you should have paid it until the date when you pay it. This is on top of any penalty you have to pay for sending in your documents late.
The amount of interest you pay depends on:
- how late the payment is
- how much duty you owe
HMRC uses the official rate of interest set by HM Treasury to work out how much you have to pay. If the interest works out at less than £25, you won’t have to pay it.
Once HMRC has notified you of the amount of interest due, you have 14 days in which to pay it. You can’t appeal against interest charges.
Unpaid penalties and interest
HMRC will only stamp your documents if you pay the full amount of Stamp Duty that’s due, plus any penalty and interest. If you don’t pay the full amount, HMRC will write to you and tell you how much extra you need to pay. They will either return your documents unstamped, along with any duty you’ve paid or keep the documents until full payment is made.
As long as you pay the amount within the time stated in the letter the documents will be stamped and returned to you, otherwise additional interest may be charged.
Don’t forget to re-send the documents with your payment if they were returned to you.
An unstamped document can’t be used for any legal purpose so it’s in your interests to pay the full amount and get it stamped.
Getting an opinion about a late submission or payment penalty
If you are sending your documents late and aren’t sure how much you’ll need to pay you can ask HMRC for their opinion. They will give you their view on how much to pay so that you can send payment along with the transfer documents for stamping. In rare cases where you don’t agree with the amount of the penalty charged you can ask for a more formal opinion - known as an ‘adjudication’. In these cases HMRC will send you a formal letter or ‘adjudication notice’
Appealing against a Stamp Duty penalty
You have the right to appeal against any Stamp Duty penalty that you disagree with. You must do this in writing within 30 days of receiving the formal adjudication notice.
Mark your letter ‘Stamp Duty’, include any reference number you have and send it to HMRC Birmingham Stamp Office.
Most appeals are settled by reaching an agreement with HMRC. But if you are unable to agree a settlement there are other options. You can ask HMRC to review their decision, or you can ask an independent tribunal to consider your appeal.
If you disagree with a late payment interest charge
Interest isn’t a penalty - it’s a commercial charge to compensate HMRC for not getting the money when they should have. So you can’t appeal against the charge. But if you think you shouldn’t be charged any interest, or if you think you’ve been charged too much, you can write to the Finance Team at the Birmingham Stamp Office to explain why. Mark your letter ‘Stamp Duty’ and include any reference number you have.