Paper returns for stamp duty land tax

Impact of computer changes in June 2011

By HMRC

Background

Major changes are being made to the computer system used by HMRC to process paper SDLT returns. As a result, the system will be unavailable from 00:01 on Saturday 25 June until 00:01 on Monday 4 July.

We set out below what will happen if a paper return is received by HMRC immediately before, during or after the shutdown period.

There are currently two versions of the paper SDLT1 in circulation: ‘old’ without new validation data and ‘new’ with that data. Both are valid up to and including 3 July 2011 but only the ‘new’ forms are valid from 4 July. If an old form is received during or after shutdown it can no longer be processed automatically.

Consequently, old returns received during or after shutdown, old returns that have not been processed before shutdown and those new returns which fail Minimum Data Set 1 (MDS1 – the minimum data required to process the return, for instance the purchaser’s name) will be sent from Netherton to Birmingham for manual processing. There they will be dealt with as set out below.

Position where paper return received up to 24 June

Both old and new returns are valid and will be processed as far as possible prior to shutdown.

Normal rejection rules using the current MDS1 criteria will apply.

Any old returns that cannot be processed prior to shutdown will be treated in the same was as old returns received during shutdown (see below).

Position where paper return received between 25 June and 3 July

Old returns
As set out above, these cannot be processed during or after shutdown. How they are dealt with depends on whether they meet the pre- 4 July MDS1 criteria, but in all cases they will be returned to the customer (or their agent as appropriate) as quickly as possible with a detailed explanatory letter asking that the data be transferred to a new SDLT1 and re-submitted. The detailed letters will cover each of the following scenarios:

1 - all pre-4 July data provided in return

if filed within the 30-day filing period on original receipt and on re-submission ? there are no penalty implications
if filed within the 30-day filing period on original receipt but then late on re-submission ? there may be grounds for a penalty waiver (see below)
if filed outside the 30-day filing period on original submission the return is already late and re-submission will also be late ? normal penalty rules apply

Penalty waiver

Where a return was received in time when first received by HMRC but has become late because of the need to re-submit simply because of the shutdown, a penalty notice will be generated automatically on re-submission. HMRC will accept an appeal (and not seek a penalty) provided the return is filed without unreasonable delay on or after 4 July. Written applications to the Appeals Team in Birmingham will be considered case-by-case.

2 – some pre-4 July data missing from the return

(with the effect that the return would have been sent back regardless of the shutdown)

if not yet late when originally received – HMRC will warn about the 30 day submission deadline and the potential for late filing penalties to be incurred if this is not met
if already late when originally received – HMRC will explain that a penalty position already applies and that a penalty will be charged when the return is re-submitted

New returns

As above, these cannot be processed during shutdown but can be on or after 4 July. How they are dealt with depends on whether they meet the post- 4 July MDS1 criteria:

1 – all post-4 July data provided

Returns will be stockpiled in Netherton and input in date order of receipt when the system goes live. This will ensure that penalty notices are only generated as they would have been if shutdown had not occurred.

2 – some post-4 July data missing

Returns will be sent back to the customer (or their agent as appropriate) as quickly as possible with an explanatory letter asking for missing data to be provided.

if filed within the 30-day filing period on original receipt and on re-submission – there are no penalty implications
if filed within the 30-day filing period on original receipt but then late on re-submission – there may be grounds for a penalty waiver (see below)
if filed outside the 30-day filing period on original submission the return is already late and re-submission will also be late – normal penalty rules apply

Penalty waiver

Where a return was received in time when first received by HMRC but has been returned to the customer/agent because of missing data on the new form and is then submitted late, a penalty notice will be generated automatically. HMRC will accept an appeal (and not seek a penalty) provided that the return is filed without unreasonable delay on or after 4 July. Written applications to the Appeals Team in Birmingham will be considered case-by-case.

Position where paper return received on or after 4 July

Old returns

From this date old returns are not valid and so are returned to customers with an explanatory letter.

If the new from is then submitted late normal penalty rules will apply.

New returns

In most cases MDS1 criteria will be met and returns will either fully process or partly process (with an SDLT8 issued for any missing data)

In cases where MDS1 criteria are not met, returns will be sent back to the customer (or their agent as appropriate) with an explanatory letter asking for the missing data to be provided. Where the return is

not yet late when originally received – HMRC will warn about the 30 day submission deadline and the potential for late filing penalties to be incurred
already late when received – HMRC will explain that a penalty position already applies and that a penalty will be charged when the return is re-submitted

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