SDLT

ooga_chaka

Can anyone advise best next steps. I have recently completed a 100% staicasing to obtain a freehold.  When we first bought 25% in 2012 we had option of paying SDLT at full market value at the time or defer and pay in stages (due once we hit 80% ownership). I have no paperwork to show which decision we took but I thought we said to pay in stages. 

Our current solicitor says she can't see why we would have done a full market election as first time buyers and its under the first time buyer threshold. Value is 225k - but I'm not sure that relief existed in 2012?

We completed in December and our solictor is saying we'd need to contact the original solicitor to get them to confirm. The problem is the solicitors no longer exist. Of I contact HMRC, can they see what decision was made back in 2012 to help determine whether we now need to pay SDLT?

SDLT_Geek

ooga_chaka said:

Can anyone advise best next steps. I have recently completed a 100% staicasing to obtain a freehold.  When we first bought 25% in 2012 we had option of paying SDLT at full market value at the time or defer and pay in stages (due once we hit 80% ownership). I have no paperwork to show which decision we took but I thought we said to pay in stages. 

Our current solicitor says she can't see why we would have done a full market election as first time buyers and its under the first time buyer threshold. Value is 225k - but I'm not sure that relief existed in 2012?

We completed in December and our solictor is saying we'd need to contact the original solicitor to get them to confirm. The problem is the solicitors no longer exist. Of I contact HMRC, can they see what decision was made back in 2012 to help determine whether we now need to pay SDLT?

There was a first time buyers' relief in effect for purchases completing between 25 March 2010 and 24 March 2012 which gave relief for transactions between £125K and £250K.  What was your completion date?

Sometimes the lease says whether the option is made to pay SDLT on market value.  Have you read the lease?

When you bought in 2012, did you complete by taking the grant of a new lease from a social landlord, or did you take an assignment of an existing lease?  The option is only available on taking the grant of a new lease.

ooga_chaka

Hi - thanks for the reply.

We completed August 2012 so outside the window you mentioned.

The only bit of lease that mentions SDLT  says the leaseholder intends stamp duty land tax to be charged in accordance with paragraph 4 of the schedule  9 of 2003 Finance Act by reference to the initial market value  and the minimum rent.

I have found the inital completion statement and it doesn't include a SDLT payment. Would it always be shown here if a payment was indeed made..?

I assume it was a new lease - it was a new build and we were first in.

If we completed in November, would HMRC not have chased us if we owe? Have the money to pay it and don't won't to incur penalty fees but not sure how I can resolve this unless HMRC confirm something is owed!

SDLT_Geek

ooga_chaka said:

Hi - thanks for the reply.

We completed August 2012 so outside the window you mentioned.

The only bit of lease that mentions SDLT  says the leaseholder intends stamp duty land tax to be charged in accordance with paragraph 4 of the schedule  9 of 2003 Finance Act by reference to the initial market value  and the minimum rent.

I have found the inital completion statement and it doesn't include a SDLT payment. Would it always be shown here if a payment was indeed made..?

I assume it was a new lease - it was a new build and we were first in.

If we completed in November, would HMRC not have chased us if we owe? Have the money to pay it and don't won't to incur penalty fees but not sure how I can resolve this unless HMRC confirm something is owed!

This is helpful.  The 2012 lease should state the market value at the time and the amount paid for the initial 25% stake.  Can you give us those figures?  You mention £225K, but it is not clear if that was the figure in 2012 or the value now.

ooga_chaka

Hi - the market value at the time was 180k. The initial 25% share we purchased was 45k.

The 225k figure quoted is the current market value, confirmed when we purchased the addtional 50% last year (for 112,500).

ooga_chaka

Just to clarify something I put on very first comment - our solicitor says she can't understand why we would have elected to pay in stages i.e.

"I’m not sure why they would elect to pay in stages as that makes no sense, as your first property you don’t have to pay anything for this sale price so a full market price election should have been made so nothing would be payable at all."

SDLT_Geek

ooga_chaka said:

Hi - the market value at the time was 180k. The initial 25% share we purchased was 45k.

The 225k figure quoted is the current market value, confirmed when we purchased the addtional 50% last year (for 112,500).

If the election had been made in August 2012 to pay SDLT on market value, then the SDLT then due would have been £1,800 (the slab rate system then applied, so it was 1%).  If that was paid, I would expect it to be shown on the completion statement.  As it is not on the completion statement and you have no record that the £1,800 was paid, you will probably have to work on the basis that SDLT was not paid at the time on the market value basis.

Do you have a calculation of the SDLT now due on staircasing out to 100%?  If the payments made were:
   £  45,000 for 25% in Aug 2012
   £112,500 for 50% in 2021
   £  56,250 for 25% recently
Then that is a total of £213,750.
SDLT on £213,750 at current standard rates would be £1,775.
But the amount of SDLT due on staircasing to over 80% is a fraction of that.
The fraction is £56,250 / £213,750
That gives SDLT due on staircasing out of £467.

That shows it was a good decision not to elect to pay SDLT on market value in 2012 (£1,800).

SDLT_Geek

ooga_chaka said:

Just to clarify something I put on very first comment - our solicitor says she can't understand why we would have elected to pay in stages i.e.

"I’m not sure why they would elect to pay in stages as that makes no sense, as your first property you don’t have to pay anything for this sale price so a full market price election should have been made so nothing would be payable at all."

That sounds wrong, it seems £1,800 would have been due in August 2012.  Hindsight suggests it would have been a good decision not to elect to pay that money then!

ooga_chaka

Well at least if I owe, which I still think I do as I surely would have remembered 1.8k being paid, it was the right decision to defer!

Will HMRC know what was elected back in 2012, as currently we have a solicitor thinking (incorrectly) we made a full market election in 2012, but wouldn't have needed to make a payment as it was under the FTB threshold (that wasn't in place when we completed in 2012!).

Surely if my solicitor, upon completion, submitted a nil return for SDLT this time around when we went to 100%, HMRC would see that is incorrect and moneyis owed?

SDLT_Geek

ooga_chaka said:

Well at least if I owe, which I still think I do as I surely would have remembered 1.8k being paid, it was the right decision to defer!

Will HMRC know what was elected back in 2012, as currently we have a solicitor thinking (incorrectly) we made a full market election in 2012, but wouldn't have needed to make a payment as it was under the FTB threshold (that wasn't in place when we completed in 2012!).

Surely if my solicitor, upon completion, submitted a nil return for SDLT this time around when we went to 100%, HMRC would see that is incorrect and moneyis owed?

Stamp duty land tax is self assessed.  It is your responsibility to get it right.

ooga_chaka

Understood.

Difficult though when solictor used for initial purchase no longer practising. If I call HMRC surely they can confirm what was elected when we did the inital purchase and therefore if we actually do owe now we have 100%?