Conveyancing Problems with SDLT

HMRC pay close attention to transactions valued around the ‎Stamp Duty Land Tax (SDLT) thresholds and can investigate up to nine months after a transaction has been declared. This can be longer if there is evidence of fraud.

The HMRC deal very harshly through prosecutions and/or fines for people who try to evade paying the correct amount of Stamp Duty Land Tax.

The most common way to avoid paying the full SDLT is to declare part of the purchase price as being paid for fixtures and fittings. This can have the effect of reducing the price paid so that it drops into a lower SDLT band, thereby evading thousands of pounds worth of tax. To stop this, HMRC have introduced the requirement that Fixtures and Fittings need to be itemised, e.g. you can still charge £5,000 for them, but you will need to list exactly what that buys and the value of each item.

The SDLT reduction is also only applicable to a chattel and because the HMRC are unwilling to produce a comprehensive list of items that are accepted as chattels, each case is considered on its own merits which makes it very difficult to give definitive advice.

Fitzhugh Gates Solicitors Comment

It is the purchasers responsibility to obtain a professional valuation in respect of each item which must represent a true figure. Even then the HMRC may assess the situation following completion and find that what has been deducted as a chattel is not a chattel and then you would be liable for the SDLT which has not been paid.

Similarly, if you attach an unrealistic value to any items then HMRC can declare that part of the value should be attached to the purchase price, which would then increase your SDLT liability.