The Law Society and City of London Law Society have broadly welcomed to proposals to reduce payment windows for stamp duty land tax - but have warned that errors could creep in unless exemptions are allowed.
HM Revenue & Customs has suggested reducing the filing and payment window on the SDLT from 30 days to 14 days. A consultation closed on 7 October.
Both the Law Society and the City of London Law Society said that, while a 14-day window may be practical in straightforward transactions, there were circumstances in which the 30-day window should be retained.
This should include cases where the transaction involved the calculation of a consideration to be paid in the future, or if all or part of the consideration to be payable is uncertain or contingent, or in transactions involving a large number of properties and occupational leases.
The City society added that reducing the time limit in these cases ‘could well result in increased errors’ … ‘as well as incorrect payment of SDLT (which HMRC is seeking to avoid).’
The Law Society said the information necessary to decide whether to apply to defer may be available only close to the effective date and this could mean that 14 days is an 'insufficient period in which to make the application, especially at times of the year when there are public holidays.’
‘The Society would ask that consideration be given to retaining the existing 30 days period for making an application to defer in the case of a contingent or uncertain sum,’ it added.
As part of the consultation, HMRC is also proposing that all agents file online returns.
The Law Society said HMRC should allow ‘exceptions for complex transactions’ and make allowances by extending time limits for communications between solicitors and HMRC.
Further, the Law Society said that in view of the 'surprisingly high' continued use of cheques, it appears that mandating electronic payment is 'required to change payment behaviours'. It has proposed implementing a transitional period of between six months and one year from when the changes go live, when either paper or electronic methods are acceptable.
Chancery Lane added that it had ‘stated many times previously’ that one of the biggest issues for members in terms of SDLT remains the ‘excessive amount of information required’ in relation to letting documents that has ‘nothing to do with the notifiable transaction’.
This information, it said is primarily for the purposes of the Valuation Office Agency. ‘If part of the reason behind mandating online filing is to increase efficiencies, HMRC and VOA should reinforce their efforts to focus on ways of reducing the information required to be provided,’ it added.
Any change to the SDLT window would come into force during the 2017-18 tax year.