HMRC SDLT: SDLTM50900 – Procedure: deferring payment in case of contingent or uncertain consideration FA03/S90: when application may be made
Deferring Payment for Contingent or Uncertain Consideration
This section of the HMRC internal manual provides guidance on the procedure for deferring payment under FA03/S90 when consideration is contingent or uncertain. It outlines the principles and concepts involved in making an application for deferral.
- Explains the conditions under which payment deferral can be requested.
- Details the application process for deferral.
- Clarifies the legal framework governing contingent or uncertain consideration.
- Provides examples to illustrate the application of these principles.
Deferring Stamp Duty Land Tax Payment
Purchasers can apply to delay the payment of Stamp Duty Land Tax (SDLT) in certain situations. Specifically, this applies when not all of the payment, known as chargeable consideration, is clear at the time of the transaction. The relevant rule for this application is found in FA03/S90.
When Can You Apply to Defer Payment?
You can submit an application to defer SDLT if:
- Some or all of the chargeable consideration is contingent or uncertain. This refers to situations where the payment amount might change based on future events, as explained in FA03/S51.
- The payment that is supposed to be made may not be due until more than six months after the transaction’s effective date.
The effective date is the date on which the transaction takes place, and this will be important for your application.
Submitting Your Application
Your application needs to be sent to the Stamp Office within 30 days of the effective date of the transaction. More guidance on this is provided in SDLTM50910.
Obligations When Applying
It is important to note that even when you apply to defer payment, you still have to pay SDLT on amounts that:
- Have already been paid at the time of your application.
- Are due to be paid within six months of the effective date.
- Are known and not uncertain.
Example of Deferred Payment Application
An example of when you might apply to defer payment can be found in SDLTM50900A. This example would clarify different situations in which deferral is appropriate.
Payable Before Six Months
Deferral can apply even if part of the payment is due before six months, as long as there is still an uncertain or contingent component that is payable after six months. This should be taken into account when you are submitting your application.
When Deferral is Not Possible
There are also circumstances where you cannot defer payment. If the amount of consideration is uncertain simply because it has not yet been calculated, but is otherwise ascertainable, then deferral is not allowed. For the application to qualify, the amount must rely on uncertain future events as described in FA03/S51(3).
In these cases, you should complete the land transaction return using your best estimate of the purchase price. Once the final amount is established, you will need to submit an amendment based on FA03/SCH10/PARA6.
Paying in Advance
If you think that interest may accumulate on the SDLT payment, you have the option to make a payment on account. This ensures you are covering any potential outstanding tax before the final amount is confirmed.