Solicitors could face penalties for not filing stamp duty returns online, under proposed government reforms to the conveyancing process.
At present solicitors and licensed conveyancers can file stamp duty land tax returns online or on paper. Stamp duty can be paid electronically or by cheque.
However, HM Revenue and Customs is proposing to introduce mandatory online filing and electronic payments as part of plans announced in last year’s autumn statement to reduce the filing and payment window from the current 30 days to 14 days.
HMRC receives more than 31,000 paper returns every year. Its consultation document on the plans states that four in 10 of the paper returns contain errors, such as unanswered mandatory questions or answers that do not correspond with information provided elsewhere in the form.
Nearly a third of stamp duty payments are made by cheque, equating to around 250,000 cheques annually.
‘Problems can arise when the cheque is not received within 30 days of the effective date of the transaction, is sent without a correct UTRN [unique transaction reference number] or is sent to the wrong address,’ the document states.
As a result, HMRC issues around 40,000 payment demands to purchasers every year.
Proposing mandatory regimes, HMRC says exemptions would be available where online filing and payment would not be reasonably practicable, ‘for example, because of remoteness of location, or on grounds of religious beliefs’.
HMRC says it could reject paper returns submitted by conveyancers who are required to file online, but acknowledges that this could lead to delays in a valid return being submitted.
‘An alternative to drive compliance with mandatory online filing would be for HMRC to impose penalties,’ HMRC suggests.
Mandatory electronic payment would also have to be supported by penalties in cases of non-compliance, the consultation document adds.
Last year the government announced that it would reduce the stamp duty filing and payment window from 30 days to 14 days. This is likely to come in to force between January and March 2018.
The change is forecast to yield a one-off £105m boost for the exchequer in 2017-18 as a result of some SDLT receipts being brought forward. This would be followed by £10m a year annually until 2020-21.
HMRC says mandatory regimes for electronic filing and payment may not be possible during the 2017-18 financial year, as the proposals would require digital system changes and legislation.
Assessing the impact of the proposed changes, HMRC says the proposals would reduce costs and administrative burdens on businesses. However, it acknowledges that in the shorter term ‘requiring businesses to file online and make electronic payments may increase their costs and admin burdens’.
A Law Society spokesperson said: 'The [consultation] is an important opportunity for solicitors to contribute to government efforts to improve the SDLT payment process.
'The consultation raises a number of worthwhile questions, and we welcome any moves to simplify and streamline the SDLT process. We encourage solicitors to contribute their considerable experience in conveyancing to this discussion.'
The consultation closes on 7 October.
17 Readers' comments