HMRC consultation on draft Stamp Duty Land Tax (Administration) Regulations 2021

The proposals

HM Revenue and Customs (HMRC) sought comments on its draft legislation: the Stamp Duty Land Tax (Administration) (Amendment) Regulations 2021.

The draft regulations include new questions on the stamp duty land tax (SDLT) return in connection with the introduction of the SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland, which comes into force from April 2021.

The draft updates the Stamp Duty Land Tax (Administration) Regulations 2003 (as amended).

Our view

We have two main points:

  • HMRC should consider adding a statement on the face of the SDLT return form to the effect that these new questions on residence can give rise to complexity and that users should refer to the HMRC guidance to help understand them
  • the guidance for the SDLT1 form should be updated to provide detailed and reliable guidance on all aspects of the new questions

We also encourage HMRC to explore whether enquiries about whether the relevant client is non-UK resident can happen much earlier in the transaction than at present.

For example, it could be helpful if estate agents helped to identify potentially more complex cases when carrying out AML investigations in order to notify the relevant parties at the earliest stage.

We would welcome further clarity and guidance from HMRC on the substantive changes made to the form and what this will mean for conveyancing solicitors.

We would encourage government to add signposts to HMRC guidance on the face of the form and ensure the guidance explains how all purchasers, not only individuals, can determine the application of the surcharge.

What this means for solicitors

The introduction of the non-UK resident surcharge and these related changes to the SDLT return mean that, for the first time from April 2021, solicitors and others in the home-buying process will have to consider the concept of residence.

Solicitors will need to obtain more information when filling out an SDLT return form.

For this reason, we would welcome information and guidance from government to help solicitors and all of those involved in that process to better understand any new steps and obligations they would need to carry out in order to fill in the revised SDLT form accurately.

Next steps

This consultation closed on 23 November 2020.

See the draft legislation, explanatory note and tax information and impact note

We’ll continue to engage with HMRC on the changes to the form with the aim of providing additional support and guidance to members as and when this becomes available.

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