The Price of Getting Your SDLT Wrong

SDLT Mistakes: The Real Cost of Getting Stamp Duty Wrong 

Stamp Duty Land Tax (SDLT) is a significant expense when purchasing property in the UK. While the calculation may seem straightforward, errors can occur, and the consequences can be both costly and stressful. Here’s what you need to know:

1. Underpaid SDLT:

If you underpay SDLT, HMRC can impose penalties and interest on the outstanding amount. Penalties can range from 0% to 100% of the unpaid tax, depending on the nature of the error. Here’s a breakdown of potential penalties:

• Honest Mistake: If you took reasonable care when completing your SDLT return but made a genuine mistake, you may not face any penalties.
• Careless Inaccuracy: If HMRC determines you were careless in completing your return, you could face a penalty of up to 30% of the unpaid tax.
• Deliberate Underpayment: For deliberate underpayment of SDLT, penalties can be as high as 100% of the unpaid tax.

2. Late Payment Interest:

In addition to penalties, interest will be charged on any unpaid SDLT. The current interest rate is 4.5%.

3. HMRC Enquiries:

HMRC has the authority to open an enquiry into your SDLT return if they suspect an error. This process can be time-consuming and stressful, as you will need to provide evidence and documentation to support your calculations.

4. Potential Legal Issues:

In some cases, underpaying SDLT can lead to legal complications affecting your property ownership, which could impact your ability to sell or remortgage the property in the future.

5. Overpaid SDLT:

It is also possible to overpay SDLT. If this happens, you can claim a refund from HMRC, but there are time limits for making a claim, so prompt action is essential.

How to Avoid Errors:

• Seek Professional Advice: Consult an SDLT tax advisor (like us) to ensure your SDLT return is completed accurately.
• Keep Accurate Records: Maintain detailed records of all property transactions, including purchase price, fees, and any relevant reliefs.
• Double-Check Your Return: Carefully review your SDLT return before submitting it to HMRC.

 

What to Do if You’ve Made a Mistake:

If you realise you’ve made an error on your SDLT return, contact HMRC as soon as possible. You can amend your return within 12 months of the filing date. If you’ve underpaid SDLT, it’s important to pay the additional amount promptly to minimise interest charges.

By understanding the potential consequences and taking steps to avoid errors, you can ensure a smooth and stress-free property transaction.

Speak to our Tax Specialists. Call: 0333 305 0956

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