Is it possible to delay paying SDLT?

by **res123** on Sat Aug 06, 2011 9:41 pm

Hi All,

I've been an avid reader of this forum and am posing my first questions with the hope of getting some guidance. I am planning on purchasing a business property. This is two part question:

1. My understanding is that the SDLT is payable only on the brick and mortar value of the property not the good will. If I am right, is there a method as to how is value assigned to the brick and mortar? Intuitively, if its left to the taxpayer they will assign as less of a value possible to the property and a higher value to the good will to minimize the SDLT. Can someone please elaborate?

2. The stamp duty is quite large and I will struggle with business if I paid this at the outset. I went through HMRC website and it seems to indicate that I can pay a minimal penalty as long as I pay the SDLT within 12 months. I am providing the link but I wonder if solicitors have some sort of responsibility to collect SDLT (I cannot imagine, as they are not tax enforcers). If they do, I suppose a solicitor won't proceed with the transaction till he has all the funds? Can someone please provide some guidance.

http://www.hmrc.gov.uk/sd/pay-penalties/penalties.htm

by **maths** on Sun Aug 07, 2011 1:32 pm

It is highly likely that the business property purchased will in addition to the land value have attributed thereto an element of goodwill; SDLT is payable on this "aggregate" value not just the value related to the land itself.

Late payment of SDLT and a failure to file the relevant Return precipitates both penalties and interest (for late payment).

The solicitor is under no obligation to collect the SDLT.

However, a failure to lodge the Return plus payment of the SDLT means that the Land Registry will not register your legal interest in the property due to the lack of an HMRC certificate (SDLT5). You will not therefore be able to borrow against the property.

by **section 44** on Sun Aug 07, 2011 10:47 pm

Filing the SDLT return and paying SDLT are two seperate things.

The Land Registry wont transfer the legal title without an SDLT certificate (SDLT5). You will only receive this once you have filed the SDLT return.

Penalties are due for late/incorrect returns. Interest is due on late paid SDLT. The interest rate is currently 2.5% but if you do not pay a liability when due then HMRC will eventually seek enforcement proceedings.

A solicitor is not a tax collector/enforcer. However a solicitor would have certain reporting obligations under money laundering and proceeds of crime rules, should they suspect that you do not intend to pay SDLT that is due.