The Inland Revenue has announced a change in the stamp duty treatment of leases which contain rent review clauses linked to changes in the retail price index (RPI).An article gave details of the approach the Revenue was applying to such leases which were executed after the High Court decision in the case of LM Tenancies plc (see [1997] Gazette 8 January, 26).

Broadly, this approach applied the contingency principle to rent reserved under the lease so that where the rent under a lease was to be adjusted by reference to future changes in the retail price index (RPI), stamp duty was calculated by reference to RPI changes in the year ending with the date of execution of the lease.The Law Society's revenue law committee argued that this approach was unjustified and was leading to many taxpayers overpaying their liability.

The committee was supporting an appeal on the issue in a test case to the High Court.

The committee therefore welcomes the announcement of the abandonment of this approach.The Stamp Office has set out the revised approach in its customer newsletter of May 1999.

It has also clarified, in correspondence, the circumstances in which increases in the RPI before the date of execution of a lease (or agreement for lease) are to be taken into account in calculating stamp duty.It has confirmed that such changes will be relevant only where the period for comparison of RPI levels begins before the date of execution of the lease (or agreement for lease as appropriate).

If, for example, a lease is expressed to be for a term commencing before a lease is executed, changes in the RPI between the stated commencement date and the date the lease is executed will only be taken into account if the period for comparing the RPI levels begins on the stated commencement date -- or some other date before the lease is executed.If the period for comparison begins on or after the date of execution of the lease, changes in the RPI will be entirely ignored in calculating the stamp duty due.The customer newsletter gives details of how taxpayers who have overpaid tax, based on assessments issued under the approach which has now been withdrawn, may claim refunds.The text is set out below, and readers should note the procedure for making repayment claims.

Please also note that there is a special Stamp Office claims helpline for enquiries.THE STAMP OFFICE CUSTOMER NEWSLETTER MAY 1999A revised approach to RPI LeasesBackground: Some leases define the amount of rent as an initial sum to be adjusted periodically by reference to changes in the Retail Price Index (RPI).In November 1997 the Stamp Office issued a newsletter explaining the method we use for calculating duty in such cases.New arrangements:In the light of recent legal advice given to the Inland Revenue, the treatment of these leases for Stamp Duty is to be changed.In future, where there is a formula expressed in the lease for rent reviews based on the RPI, only the change in the RPI between the date the lease begins and the date it is executed will be taken into account in working out the duty.Will this mean that duty will now be calculated differently?Yes.

We will no longer be using the current rate of change in RPI as a basis for projecting future rent rises.

Generally, this will mean that the starting level for the rent will be used in the stamp duty calculation.In most cases this should result in less duty being payable.

This also means that many people have paid too much Stamp Duty in the past.If I paid too much duty am I entitled to claim my money back?Yes.

We will make repayments of excess stamp duty to those affected, provided that the claim is made within two years of the date of execution of the lease.You are also entitled to claim if you lodged an appeal against the assessment on your lease.

Exceptionally, on this occasion we will also consider cl aims on similar leases dating back to 25 Februay 1995.How do I make a claim?If you think you are entitled to a repayment, or you act for a client who is entitled to a repayment, you should make your claim to: Stamp Allowance Claims Section, Manchester Stamp Office, Alexandra House, Parsonage, Manchester M60 9BT; DX: 14430 Manchester 2.

Information and advice is also available by telephoning our claims helpline on: 0845 603 0135To keep costs to a minimum, all calls will be charged at local rate.What documents do I need to provide?To enable us to deal with your claim please send your original stamped document to the address above.

We cannot accept duplicate or copy documents, as we need to make an adjustment to the stamps on the document itself.What if I no longer have the document?If you no longer have the document in your possession because it is held by a solicitor, building society or Land Registry, please contact our claims section about alternative arrangements.Further information and adviceWe will make every effort to deal with your enquiries and claims as quickly as possible.

Although we aim to keep delays to a minimum, some customers may find that it takes us a little longer to process claims initially because of the high volume we are expecting.Further details about these changes can be obtained from our helpline.

Information is also available on the Internet at www.inlandrevenue.gov.uk