Appeal - Commissioners - Stamp duty

Lancer Scott Ltd v Revenue and Customs Commissioners: Upper Tribunal (Tax and Chancery Chamber) (Judge Colin Bishopp): 10 January 2012

The taxpayer company had purchased five flats. Contracts were exchanged on 2 October 2009 and the consideration was paid in full on 9 October. Land transaction returns were submitted on 20 November, 42 days after completion of the transaction. The First-tier Tribunal (Tax Chamber) (the FTT) concluded that the returns had been submitted late, and a penalty of £100 for each return had been due. The FTT had further found that there had been no reasonable excuse for the late returns. The taxpayer appealed the decision.

The taxpayer contended that the FTT had wrongly treated 9 October 2009 as the date from which its time to submit the returns had begun, and that the FTT should have taken a date in December 2009, since until its title was registered by the Land Registry, the taxpayer was not the lawful owner of the flats. In support of that submission, the taxpayer relied on section 44(5) of the Finance Act 2003 (the 2003 act), which provided that a contract was substantially performed when: '(a) the purchaser, or a person connected with the purchaser, takes possession of the whole, or substantially the whole, of the subject matter of the contract; or (b) a substantial part of the consideration is paid or provided.' The appeal would be dismissed.

The appellant’s argument was untenable. The FTT was right to conclude that the effective date was 9 October 2009. The inference to be dawn from the facts was that the contracts exchanged on 2 October contemplated completion, and in particular payment of the price, on a later date, in the event 9 October. Since the entirety of the consideration was paid on 9 October that was the effective date. Further, paragraph (a) of section 44(5) of the 2003 act referred to 'possession' rather than 'ownership' and there had been no impediment to the appellant taking possession. By paying the contractual price, the appellant had secured the right to be registered as owner and what had followed had not undermined that substantive right (see [8], [9] and [10] of the judgment).

The parties made written submissions only.