Read the original guidance here:
HMRC SDLT: SDLTM50310 – Procedure: Adjustment where contingency ceases or consideration ascertained FA03/S80 -special cases

SDLTM50310 – Procedure for Adjusting Stamp Duty Where Contingency Ends or Consideration is Determined

This article explains what you need to do when handling Stamp Duty Land Tax (SDLT) adjustments after a property transaction. It covers situations where the original transaction was reported with estimated amounts, and then the actual amounts become known. We will break down the procedures for different scenarios clearly.

1. Original Transaction Reported on SDLT1 with No Tax Required

In some cases, the original transaction was reported with an estimated consideration (the payment made for the property) that was below the threshold for SDLT. When the actual consideration is later found to be higher than the initial estimate, further action is needed.

Steps to Take

• You must send a letter to the Stamp Office with the following information:
• UTRN of the Original Return: Provide the Unique Transaction Reference Number from your first SDLT return.
• Details of Actual Consideration: State the correct amount that was actually paid for the property.
• Self Assessment of Tax Now Due (if applicable): Calculate any SDLT that is now owed based on this correct amount.
• Payment of Any Tax: If you owe tax, it must be paid within 30 days of knowing the actual consideration.

2. Original Transaction Reported with Consideration Estimated and Tax Paid

If tax was originally paid based on an estimated consideration, and the actual consideration is now known to be different, there are specific actions to take.

Steps to Take

• Again, you need to submit a letter to the Birmingham Stamp Office. Include the following:
• UTRN of the Original Return: This is again the Unique Transaction Reference Number.
• Details of Actual Consideration: Clearly outline the correct payment amount for the property.
• Self Assessment of Tax Now Due: Calculate the SDLT based on the actual consideration.
• Payment or Claim: If the new amount shows you owe more tax, pay the extra within 30 days. If the estimate was too high, ask for a refund of the overpaid tax.

3. Original Transaction Not Reported Because Estimated Consideration was Below Notification Threshold

Sometimes, a property transaction falls below the notification threshold, and therefore, it was never reported. If the actual consideration is now found to exceed the threshold, follow these guidelines.

Steps to Take

• If the actual consideration remains below the threshold that was in place when the transaction occurred, you don’t need to take any action.
• If the actual consideration is now above the threshold, complete an SDLT1 form with all necessary details about the transaction.
• Send the completed form to the Birmingham Stamp Office. Remember, use the actual consideration amount and the effective date is the date of your original transaction.

Important Timeframes and Penalties

When reporting the actual consideration, it is crucial that you do this within thirty days of knowing the new information. Failing to report in time may result in penalties. Specifically, for the scenario mentioned in the previous section, a penalty will be applied starting from the effective date of the original transaction.

Interest Charges

• If tax is owed due to an underestimated consideration, interest will begin to accrue from thirty days after the original effective date.
• If you receive a tax refund because the estimate was too high, interest will start from the date HMRC gets your request for the repayment.

Special Case Considerations

If you have made a claim for deferment under Section 90, the penalties and interest will start from the date when the contingency ended or the consideration was determined.

Final Thoughts

Handling SDLT returns can be complex, especially when adjustments need to be made. Ensuring you follow the outlined procedures for reporting actual considerations and calculating the correct SDLT is essential to avoid potential penalties and interest charges.