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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
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Interest: Interest Review Unit (IRU): Miscellaneous taxes and duties: Stamp Duty Land Tax (SDLT) Background

SDLT, introduced in Finance Act 2003, is a tax on land transactions involving any estate, interest, right or power in or over land in the United Kingdom. From 26 September 2005 any late payment gives rise to an interest charge which is due on an amount of unpaid tax from 30 days after the relevant date.

It is a handle now, check later system with the purchaser responsible for making a land transaction return and paying the SDLT within 30 days of the effective date of the transaction. The general rule is that the effective date of a land transaction is when that land transaction is completed.

Where payment is not made by the due date we may issue reminders as a method of encouraging payment. Their absence, or delayed issue, has no bearing on the build up of interest on a late payment. It is the purchaser’s duty to make sure payment is made on time.

Objections to interest

The purchaser may object to interest on the grounds that a return and cheque, or cheque on its own, were sent on time but we never got them or got them late.

Where the original is banked late;

  • Interest is to be maintained as we cannot be held liable for post being delayed.

Where a replacement cheque is banked at a later date;

  • Interest is to be maintained unless one of the following circumstances applies:-

The purchaser may object to interest on the grounds that a cheque was sent to the handling centre along with the return. The return is dealt with on time but the cheque was not sent to the bank for payment.

You should look at the facts leading up to getting the replacement cheque;

  • Normally interest is to be maintained as there is no proof that we got an original cheque with the return. Any proof of preparation is not proof we got it.
  • Where there is evidence to suggest we got a cheque with the return but we then lost it, for example staple holes or an HMRC note on the return saying we also got a cheque; give the benefit of the doubt. Consider giving up interest from the interest charging date to the date the purchaser first contacts us. If replacement payment is received within a further 14 days consider giving up the interest in full. However if the replacement payment is delayed beyond the 14 days then maintain the balance of the interest.

To qualify for relief the customer needs to have contacted us before we have issued any reminder or statement of duty that prompts the contact.

Sending the cheque to us is not the end of the purchaser’s duty for payment. They should also be watching that the cheque clears from their bank account and looking into what has gone wrong if this does not happen within a few days of sending it to us. To put right the loss of the original payment the purchaser may send an unsolicited replacement cheque or contact us about the missing payment. Where the purchaser has done everything correctly, and within a short time of the original going missing, consider giving up interest to recognise their pro-active approach:

  • If we get the unsolicited replacement within 30 days of the alleged original payment date give up the interest in full.
  • Where the purchaser does quickly get in touch, we confirm we do not appear to have got the cheque and they replace within 14 days of this contact and the whole time period is under 45 days, consider giving up interest from the interest charging date to the date we got the replacement.

To qualify for relief the customer needs to have contacted us before we have issued any reminder or statement of duty that prompts the contact.

On processing the return we will issue an SDLT5 certificate. The purchaser may claim that they believed that getting this showed we had got the payment and they took no further action until some other advice, SDLT12 perhaps, prompted them to look into the payment position.

  • Maintain the interest as the SDLT5 only confirms validation of the return. The issue of the SDLT5 does not depend on us getting the payment. This should prompt the purchaser to then do the checks of his bank account to confirm the payment has cleared.

The purchaser may give other reasons for objecting to the interest charge. Look at these in line with the guidance at DMBM405000 and so on.