The duty to stamp

District Judge Nic Madge seeks to save you from a nasty shock in courtIt seems a simple case.

Your client is in the witness box and you are just starting a short examination in chief.

Please can you produce the tenancy agreement.

Your opponent stands up.

I object your honour.

The tenancy agreement is not admissible.

It has not been stamped.

You do not know the answer and there is no assistance from the bench.The case is adjourned.

As you leave court, your disgruntled client hands you an article from the London Evening Standard of 14 February 2001, which begins:Hundreds of thousands of private landlords and tenants could find themselves with unenforcable tenancy agreements or fines and penalties because they are unaware of the stamp duty rules and, in particular, changes introduced in the last Budget.The basic rule is still contained in section 14 of the Stamp Act 1891 which states that .

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an instrument .

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relating .

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to any property situate .

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in any part of the United Kingdom, shall not .

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be given in evidence, or available for any purpose whatever, unless it is duly stamped in accordance with the law in force at the time when it was executed.

This includes leases and tenancy agreements (section 122(1)).

There are though exceptions.

The rule does not apply in criminal proceedings.

Section 14 also provides that it is the duty of the judge to take notice of any omission or insufficiency of stamp and that, if payment of the stamp duty, any interest, penalty and an additional sum, is made to the judge, the document may be received in evidence.So when is stamp duty payable, and how much? Judges are not supplied with stamp duty tables.Short tenancy agreements are potentially stampable documents and may have to be sent to the Inland Revenue.

Rates of duty were changed by the 2000 Budget.

They are set out in Finance Act 1999 section 112 and schedule 13 (which replaces Stamp Act 1891 schedule 1) as amended by Finance Act 2000 section 115.

Tenancies granted after 28 March 2000 for indefinite terms (for example, periodic tenancies) or for terms of less than seven years without a premium where the rent is less than 5,000 per annum do not attract stamp duty.

If the annual rent is more than 5,000 duty is payable.

It is calculated at 1% of the rent.

The position is different with furnished tenancies.

There is a fixed duty of 5 on a furnished letting of a house or apartment that is let for less than a year if the rent payable in that period is more than 5,000.

If the rent is less than 5,000 for the period no duty is chargeable.

If the tenancy is for a year or more, the position is the same as for unfurnished tenancies.

If duty is payable and there are two copies (lease and counterpart) there is a fixed duty of 5 on the landlords counterpart.So, for example, if a property (whether furnished or unfurnished) is let for a fixed term of one year at a rent of 600 per month (that is, 7,200 per annum) the duty is 1% of the rent, rounded up to the nearest 5 a total of 75.There is a 30-day time limit for getting documents stamped.

If they are not stamped within that period, a penalty may be imposed for late presentation of the document.

If documents are presented for stamping up to one year late, the maximum penalty payable is 300.

In addition interest may be payable on the late paid duty, (current rate 8.5% per annum) but an interest charge is only imposed where the interest payable exceeds 25.There is one potential way of persuading a judge to look at an unstamped document.

It is settled practice to allow an unstamped document to be used upon the personal undertaking .

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of solicitors who are officers of the court, to stamp it and to produce it so stamped before the order is drawn up.

(In re Coolgardie Goldfields Ltd [1900] 1 Ch 475, 477).

There may be problems with this course of action.

It has to be a personal undertaking by the solicitor.

Undertakings from individual parties or by counsel cannot be accepted because they are not officers of the court.

Furthermore, such an undertaking is likely to lead to delay, since the court order should not be drawn up until the stamped lease has been produced.Check the stamp duty position well in advance of the hearing.

Paying overdue stamp duty, interest and penalties in grubby fivers to a judge in the middle of a busy possession list is not recommended.More information is available from the Inland Revenue Stamp Office on 0845 603 0135.District Judge Nic Madge sits at West London County Court