Read the original guidance here:
HMRC SDLT: Guide on Adjusting Land Transaction Tax for Contingency and Uncertainty Cases

Adjustment Procedure When Contingency Ends or Consideration Is Determined – SDLTM50300

This article explains the process of making adjustments to land transaction returns when the consideration for a land transaction is uncertain or contingent. The main governing rules are outlined in FA03/S51 and FA03/S80.

Understanding Contingency

A contingency refers to a situation where part or all of the money involved in a land transaction depends on certain future events occurring. According to FA03/S51:

• The return is filed based on the expectation that the event will happen.
• This means there will be additional amounts payable in the future.

If it turns out later that the expected event will not happen, the transaction return must be adjusted according to FA03/S80.

Steps to Take When Contingency Is No Longer Applicable

• If the twelve-month period for adjustments has not yet ended, the buyer should update the previous assessment. This is supported by FA03/SCH10/PARA6.
• If the twelve-month period has ended, a claim can be made under FA03/SCH11A.

When a return is amended and there are no inquiries regarding the land transaction return, the amount of stamp duty land tax (SDLT) owed will be corrected. If the tax amount paid was too high, the excess will be refunded.

Additionally, interest on the repayment will be calculated from the time when the tax was initially paid.

Understanding Uncertainty

In some cases, a return might be submitted when the amount involved is uncertain or when there is a mix of uncertainty and contingency. Under FA03/S80, if the exact amount of the consideration becomes known later and:

• More SDLT is now owed, or
• The transaction is notified or chargeable for the first time,

Then a new land transaction return must be submitted.

Requirements for Filing the New Return

When filing this return, certain conditions must be met:

• The return must be filed within 30 days of knowing the final amount.
• Since 1 March 2019, if the transaction is being reported for the first time, the return deadline is shortened to 14 days.
• The return must include a self-assessment of the SDLT due based on the new information.
• The tax amount needs to be calculated according to the rates that were in force on the effective date of the transaction.
• Interest will be calculated from the effective date of the transaction, not from the date of determining the uncertainty. Refer to FA03/S87(4) for more on this.

If the transaction was not previously reported, the land transaction return should be submitted using form SDLT1 or its electronic equivalent. In cases where form SDLT1 was already submitted at the time of the transaction, any necessary corrections should be made in a letter that states the required amendments to the original return.

Both the new return and any tax payment should be sent to the Birmingham Stamp Office. The address is outlined below.

Repaying Overpaid Tax

If new information indicates that less tax is due in an uncertainty case, the buyer can claim a refund by amending the return. The amendment should be done according to the following:

• If the claim is within the twelve-month deadline, follow FA03/SCH10/PARA6.
• If it is beyond the twelve-month period, claims should be made under FA03/SCH11A.

This amended return should be sent to HMRC Stamp Taxes. The specific address can be found on the official HMRC website.

Interest will be paid on the amount of tax that was overpaid, starting from the date of the original payment.

Legal References and Processes

The rules of FA03/SCH10 also apply to returns under FA03/S80, similar to how they apply to returns submitted under FA03/S76. This means that HMRC has the authority to conduct inquiries and impose penalties for late returns.

Additionally, inquiries may be undertaken for amended returns and claims under FA03/SCH11A. For further details, please see SDLTM05040.

Contact Information

The Birmingham Stamp Office should receive all relevant correspondence related to SDLT returns and adjustments. Following proper procedures ensures compliance with HM Revenue & Customs standards.