Why do I need an SDLT specialist?

I’m often asked this by prospective clients who’ve been told to seek Stamp Duty Land Tax (SDLT) advice. Last week, the Rt Hon Angela Rayner found out just how complex SDLT can be.

The former Deputy Prime Minister fell foul of what seems like a simple rule: when buying a residential property, a 5% SDLT surcharge applies if you already own another residential property. But, the rules around trusts make things more complicated. You don’t count property owned through a trust – unless that trust gives you beneficial ownership (via a bare trust arrangement) or an interest in possession, in which case the property is treated as yours. In addition, if your minor child is the beneficiary of such a trust, the property counts as yours too.  The Replacement Main Home rules add further complications when determining the correct tax treatment.

Most SDLT returns are submitted by conveyancing solicitors. Whilst they’re highly skilled in their field, when complex SDLT reliefs or exemptions may apply, or where the rules are unclear, they often refer clients to SDLT specialists — like the our SDLT Advisory Team.  This isn’t being overly cautious. It’s about getting it right and protecting you from costly mistakes.

There are very few SDLT specialists in England and Northern Ireland. London, with a population of over 9 million, currently has 763 Chartered Tax Advisers — but only 42 of these specialise in Stamp Duties. SDLT expertise is rare, and it matters.

SDLT is calculated on properties costing hundreds of thousands — or often millions — of pounds, so the liabilities are significant. It’s important to be confident about your position before you commit to a purchase so you know the costs in advance, and ensure that the transaction is reported correctly to HMRC.

SDLT Returns must be filed within 14 days of completion of a purchase, so there is not much time after you have bought the property to review the position.  It is therefore important to establish the position before the purchase completes.

We use our experience and insight to identify the correct SDLT rate, any available reliefs, and ultimately to ensure the correct amount of tax is paid. Often, the law requires a subjective assessment of the property. We provide a clear, reasoned opinion so your conveyancer can submit the return with confidence.

Getting it wrong can be expensive. HMRC has nine months to challenge an SDLT return and if they find an error, penalties can be severe:

• Up to 30% of the tax underpaid due to a careless mistake
• Up to 70% for a deliberate understatement
• Up to 100% if the error was concealed

Even a small percentage of a large SDLT bill can result in substantial penalties.

HMRC also charges late payment interest, currently at 8% per annum. The SDLT rules are complex, and errors can lead to unexpected costs.

To avoid issues in future transactions, it is important to seek specialist SDLT advice before you buy a new property. For more information contact our Real estate team today.