HMRC SDLT: SDLTM80070 – Compliance: Introduction: Interest and penalties

Compliance: Introduction to Interest and Penalties

This section of the HMRC internal manual provides guidance on compliance related to interest and penalties. It outlines the principles and concepts necessary for understanding how interest and penalties are applied within the context of HMRC regulations.

• Explains the purpose of interest and penalties in tax compliance.
• Details the conditions under which interest and penalties are imposed.
• Describes the calculation methods for determining interest and penalties.
• Offers guidance on how to appeal against imposed penalties.

Understanding Interest and Penalties in SDLT Compliance

Overview

When it comes to Stamp Duty Land Tax (SDLT), it is important to be aware of the possible interest and penalties that can arise if payments or returns are not handled correctly. This section will break down what interest and penalties mean, when they apply, and how they can affect taxpayers.

Interest on SDLT

– Interest on unpaid SDLT begins to accumulate from the date when the tax was originally due. This means that if you don’t pay on time, you will start to incur interest charges right from that deadline.
– The rules for calculating interest can be complex, but generally, the longer you wait to pay, the more interest you will end up owing.
– For detailed guidance on how interest is calculated and what rates apply, you can refer to SDLTM85930.

Types of Penalties

There are different types of penalties that you could face if you do not comply with SDLT rules:

Fixed Penalties

– Fixed penalties are set amounts that may be charged if you fail to notify HMRC about a transaction or if you submit your land transaction return late.
– This penalty is typically imposed automatically and does not take into account the amount of tax due.

Tax Geared Penalties

– Tax geared penalties are more variable and depend on the amount of tax that you were supposed to pay.
– The idea is that the penalty reflects the seriousness of the tax owed rather than being a standard charge. In other words, if more tax is outstanding, the penalty will be higher.

Daily Penalties

– Daily penalties may apply in situations where there is a continued failure to comply with SDLT requirements.
– For example, if you were late in submitting your return, a daily charge may be applied for each day that the return remains outstanding.

Penalties for Incorrect Returns

– If you submit a land transaction return that contains inaccuracies, you may also be subject to penalties.
– These penalties apply if HMRC believes that there has been a deliberate attempt to evade tax or if the inaccuracies can be seen as careless or negligent.

Failure to Notify

– It is also important to understand that failing to notify HMRC of a transaction can result in penalties.
– If a taxpayer does not inform HMRC about a transaction that requires SDLT, they may face varying penalties based on the circumstances and amount involved.

Other Considerations

– Understanding the implications of these penalties can help you to plan better and avoid falling into non-compliance situations.
– It is always best to remain informed on guidance from HMRC to ensure that you fulfil your obligations correctly and on time.

Resources for Further Information

If you wish to explore more about penalties and interest, refer to the following guidance:

– You can find further information on penalties related to SDLT compliance in the HMRC Compliance Handbook at: https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch80000.

– To gain deeper insights into the day-to-day handling of interest and penalties, the specific regulation details can be accessed via SDLTM85930.

This information provides a basic understanding of what can happen if SDLT obligations are not adhered to properly. By ensuring that payments and returns are handled correctly, taxpayers can avoid these additional costs and complexities.

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