HMRC internal manual

Stamp Taxes on Shares Manual

STSM015020 - Introduction to Stamp Duty on shares and Stamp Duty Reserve Tax (SDRT): Stamp duty - payment and penalties: penalties for late stamping

The legislation governing the application of penalties for the late stamping of an instrument is at section 15B Stamp Act 1891, which provides that a penalty is payable if an instrument is not presented for stamping within thirty days of either:

  • If executed within the United Kingdom (UK) or relating to land within the UK, the day on which it is executed (s.15B(1)(a) SA1891)
  • If executed outside the UK and not relating to land within the UK, the day on which it is first received in the UK (s.15B(1)(b)SA1891)

This provision only applies to instruments executed on or after 1 October 1999, having been added to SA1891 by section 109(1) Finance Act 1999.

It should be further noted that, although the references to land are now largely superseded by the introduction of Stamp Duty Land Tax (SDLT) on 1 December 2003, an instrument executed outside the UK that transfers both shares and land within the UK (and which is therefore liable to Stamp Duty on the consideration for the shares) will fall within s.15B(1)(a) SA1891, not s.15B(1)(b) SA1891, and will thus attract a penalty if not presented for stamping within thirty days of execution rather than thirty days from first entry into the UK (see s.15B(1A) SA1891).

The maximum penalty for an instrument not presented for stamping within the relevant thirty day period is:

  • Presented for stamping up to 12 months later: £300 or the amount of unpaid duty, whichever is lower; or
  • Presented for stamping over 12 months later: £300 or the amount of unpaid duty, whichever is higher.

S.15B(4) SA1891 provides that penalties can be mitigated (see STSM153020).

S.15B(5) SA1891 states that no penalty is payable if there is a reasonable excuse for the delay. Examples of acceptable and unacceptable reasons are at STSM015040 and STSM153070.

In practice the penalty should be calculated as follows:

  • 10% of the Stamp Duty for cases with up to 12 months delay, capped at £300; with a deminimis penalty level of £20 (any amount below this - penalty reduced to nil);
  • 20% of the Stamp Duty for cases delayed for 12 to 24 months, with a deminimis penalty level of £20; and
  • 30% of the Stamp Duty for delays over 24 months, with a deminimis penalty level of £20.

For delays of 12 months or more, the penalty rate may be higher if there is evidence that the failure to submit instruments for stamping was deliberate.

The more serious the reason, the greater the penalty. The following lists show the maximum and minimum penalty percentages for each type of failure dependent on:

  • The type of failure;
  • Whether the disclosure is unprompted or prompted; and
  • The time at which a failure is disclosed.

Instrument Presented for Stamping 12-24 Months Late:

a) Unprompted Disclosure

  • Deliberate and Concealed Behaviour: 50%
  • Deliberate but not Concealed Behaviour: 35%
  • Non- Deliberate: 20% (standard minimum penalty - no further adjustment)

b) Prompted Disclosure

  • Deliberate and Concealed Behaviour: 70%
  • Deliberate but not Concealed Behaviour: 50%
  • Non- Deliberate: 20% (standard minimum penalty - no further adjustment)

Instrument Presented for Stamping Over 24 Months Late:

a) Unprompted Disclosure

  • Deliberate and Concealed Behaviour: 70%
  • Deliberate but not Concealed Behaviour: 50%
  • Non- Deliberate: 30% (standard minimum penalty - no further adjustment)

b) Prompted Disclosure

  • Deliberate and Concealed Behaviour: 100%
  • Deliberate but not Concealed Behaviour: 70%
  • Non- Deliberate: 30% (standard minimum penalty - no further adjustment)

Formal appeals against Stamp Duty penalties can only be made through the adjudication process. See STSM012020 for further details.