Finance Act 2003 (c. 14)

(The document as of February, 2008)

-- Back --

Page 17

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34 | P.35 | P.36 | P.37 | P.38 | P.39

(i) the premium obtainable on the open market for the grant of a lease containing the same terms as the lease but with the substitution of the minimum rent for the rent payable under the lease, or

(ii) a sum calculated by reference to that premium;

(e) the lease must contain a statement of the minimum rent and of--

(i) the premium obtainable on the open market, or

(ii) the sum calculated by reference to that premium,

by reference to which the premium is calculated.

(3) An election for tax to be charged in accordance with this paragraph must be included in the land transaction return made in respect of the grant of the lease, or in an amendment of that return, and is irrevocable, so that the return may not be amended so as to withdraw the election.

(4) Where this paragraph applies--

(a) the rent in consideration of which the lease is granted shall be taken to be the minimum rent stated in the lease in accordance with sub-paragraph (2)(e), and

(b) the chargeable consideration for the grant other than rent shall be taken to be the amount stated in the lease in accordance with sub-paragraph (2)(e)(i) or (ii).

(5) In this paragraph the "minimum rent" means the lowest rent which could become payable under the lease if it were altered as mentioned in sub-paragraph (2)(c) at the date when the lease is granted.

Shared ownership leases: meaning of "qualifying body" and "preserved right to buy"

5 (1) This paragraph has effect for the purposes of paragraphs 2 and 4 (shared ownership leases: election as to basis of taxation).

(2) A "qualifying body" means--

(a) a local housing authority within the meaning of the Housing Act 1985 (c. 68);

(b) a housing association within the meaning of--

(i) the Housing Associations Act 1985 (c. 69), or

(ii) Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I. 15));

(d) the Northern Ireland Housing Executive;

(e) the Commission for the New Towns;

(f) a development corporation established by an order made, or having effect as if made, under the New Towns Act 1981 (c. 64).

(3) A lease is granted "in pursuance of the preserved right to buy" if--

(a) the vendor is a person against whom the right to buy under Part 5 of the Housing Act 1985 is exercisable by virtue of section 171A of that Act (preservation of right to buy on disposal to private sector landlord),

(b) the lessee is, or lessees are, the qualifying person for the purposes of the preserved right to buy, and

Rent to mortgage or rent to loan: chargeable consideration

6 (1) The chargeable consideration for a rent to mortgage or rent to loan transaction is determined in accordance with this paragraph.

(2) A "rent to mortgage transaction" means--

(a) the transfer of a dwelling to a person, or

(b) the grant of a lease of a dwelling to a person,

pursuant to the exercise by that person of the right to acquire on rent to mortgage terms under Part 5 of the Housing Act 1985 (c. 68).

(3) The chargeable consideration for such a transaction is equal to the price that, by virtue of section 126 of the Housing Act 1985, would be payable for--

(a) a transfer of the dwelling to the person (where the rent to mortgage transaction is a transfer), or

(b) the grant of a lease of the dwelling to the person (where the rent to mortgage transaction is the grant of a lease),

if the person were exercising the right to buy under Part 5 of that Act.

(4) A "rent to loan transaction" means the execution of a heritable disposition in favour of a person pursuant to the exercise by that person of the right to purchase a house by way of the rent to loan scheme in Part 3 of the Housing (Scotland) Act 1987 (c. 26).

(5) The chargeable consideration for such a transaction is equal to the price that, by virtue of section 62 of the Housing (Scotland) Act 1987, would be payable for the house if the person were exercising the right to purchase under section 61 of that Act.

Section 78

SCHEDULE 10 Stamp duty land tax: returns, enquiries, assessments and appeals

Part 1 Land transaction returns

Contents of return

1 (1) A land transaction return must--

(a) be in the prescribed form,

(b) contain the prescribed information, and

(c) include a declaration by the purchaser (or each of them) that the return is to the best of his knowledge correct and complete.

(2) In sub-paragraph (1) "prescribed" means prescribed by regulations made by the Inland Revenue.

(3) The regulations may make different provision for different kinds of return.

(4) Regulations under sub-paragraph (1)(b) may require the provision of information corresponding to any of the particulars formerly required under--

(a) Schedule 2 to the Finance Act 1931 (c. 28) (requirement to deliver particulars of land transactions in Great Britain), or

(b) section 244 of the Finance Act 1994 (c. 9) (corresponding provision for Northern Ireland).

(5) The return is treated as containing any information provided by the purchaser for the purpose of completing the return.

Meaning of filing date and delivery of return

2 (1) References in this Part of this Act to the filing date, in relation to a land transaction return, are to the last day of the period within which the return must be delivered.

(2) References in this Part of this Act to the delivery of a land transaction return are to the delivery of a return that--

(a) complies with the requirements of paragraph 1(1) (contents of return), and

(b) is accompanied by payment of any tax required to accompany the return.

Failure to deliver return: flat-rate penalty

3 (1) A person who is required to deliver a land transaction return and fails to do so by the filing date is liable to a flat-rate penalty under this paragraph.

He may also be liable to a tax-related penalty under paragraph 4.

(2) The penalty is--

(a) £100 if the return is delivered within three months after the filing date, and

(b) £200 in any other case.

Failure to deliver return: tax-related penalty

4 (1) A purchaser who is required to deliver a land transaction return in respect of a chargeable transaction and fails to do so within twelve months after the filing date is liable to a tax-related penalty under this paragraph.

This is in addition to any flat-rate penalty under paragraph 3.

(2) The penalty is an amount not exceeding the amount of tax chargeable in respect of the transaction.

Formal notice to deliver return: daily penalty

5 (1) If it appears to the Inland Revenue--

(a) that a purchaser required to deliver a land transaction return in respect of a chargeable transaction has failed to do so, and

(b) that the filing date has now passed,

they may issue a notice requiring him to deliver a land transaction return in respect of the transaction.

(2) The notice must specify--

(a) the transaction to which it relates, and

(b) the period for complying with the notice (which must not be less than 30 days from the date of issue of the notice).

(3) If the purchaser does not comply with the notice within the specified period, the Inland Revenue may apply to the General or Special Commissioners for an order imposing a daily penalty.

(4) On such an application the Commissioners may direct that the purchaser shall be liable to a penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction.

(5) This paragraph does not affect, and is not affected by, any penalty under paragraph 3 or 4 (flat-rate or tax-related penalty for failure to deliver return).

Amendment of return by purchaser

6 (1) The purchaser may amend a land transaction return given by him by notice to the Inland Revenue.

(2) The notice must be in such form, and contain such information, as the Inland Revenue may require.

(3) Except as otherwise provided, an amendment may not be made more than twelve months after the filing date.

Correction of return by Revenue

7 (1) The Inland Revenue may amend a land transaction return so as to correct obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise).

(2) A correction under this paragraph is made by notice to the purchaser.

(3) No such correction may be made more than nine months after--

(a) the day on which the return was delivered, or

(b) if the correction is required in consequence of an amendment under paragraph 6, the day on which that amendment was made.

(4) A correction under this paragraph is of no effect if the purchaser--

(a) amends the return so as to reject the correction, or

(b) after the end of the period within which he may amend the return, but within three months from the date of issue of the notice of correction, gives notice rejecting the correction.

(5) Notice under sub-paragraph (4)(b) must be given to the officer of the Board by whom notice of the correction was given.

Penalty for incorrect or uncorrected return

8 (1) A purchaser who--

(a) fraudulently or negligently delivers in respect of a chargeable transaction a land transaction return which is incorrect, or

(b) discovers that a land transaction return delivered by him in respect of a chargeable transaction (neither fraudulently nor negligently) is incorrect and does not remedy the error without unreasonable delay,

is liable to a tax-related penalty.

(2) The penalty is an amount not exceeding the amount of tax understated, that is, the difference between--

(a) the amount of tax chargeable in respect of the transaction, and

(b) the amount that would have been chargeable on the basis of the return delivered.

Part 2 Duty to keep and preserve records

Duty to keep and preserve records

9 (1) A purchaser who is required to deliver a land transaction return must--

(a) keep such records as may be needed to enable him to deliver a correct and complete return, and

(b) preserve those records in accordance with this paragraph.

(2) The records must be preserved for six years after the effective date of the transaction and until any later date on which--

(a) an enquiry into the return is completed, or

(b) if there is no enquiry, the Inland Revenue no longer have power to enquire into the return.

(3) The records required to be kept and preserved under this paragraph include--

(a) relevant instruments relating to the transaction, in particular, any contract or conveyance, and any supporting maps, plans or similar documents;

(b) records of relevant payments, receipts and financial arrangements.

Preservation of information instead of original records

10 (1) The duty under paragraph 9 to preserve records may be satisfied by the preservation of the information contained in them.

(2) Where information is so preserved a copy of any document forming part of the records is admissible in evidence in any proceedings before the Commissioners to the same extent as the records themselves.

Penalty for failure to keep and preserve records

11 (1) A person who fails to comply with paragraph 9 in relation to a transaction is liable to a penalty not exceeding £3,000, subject to the following exception.

(2) No penalty is incurred if the Inland Revenue are satisfied that any facts that they reasonably require to be proved, and that would have been proved by the records, are proved by other documentary evidence provided to them.

Part 3 Enquiry into return

Notice of enquiry

12 (1) The Inland Revenue may enquire into a land transaction return if they give notice of their intention to do so ("notice of enquiry")--

(a) to the purchaser,

(b) before the end of the enquiry period.

(2) The enquiry period is the period of nine months--

(a) after the filing date, if the return was delivered on or before that date;

(b) after the date on which the return was delivered, if the return was delivered after the filing date;

(3) A return that has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) of the return under paragraph 6.

Scope of enquiry

13 (1) An enquiry extends to anything contained in the return, or required to be contained in the return, that relates--

(a) to the question whether tax is chargeable in respect of the transaction, or

(b) to the amount of tax so chargeable.

This is subject to the following exception.

(2) If the notice of enquiry is given as a result of an amendment of the return under paragraph 6 (amendment by purchaser)--

(a) at a time when it is no longer possible to give notice of enquiry under paragraph 12, or

(b) after an enquiry into the return has been completed,

the enquiry into the return is limited to matters to which the amendment relates or that are affected by the amendment.

Notice to produce documents etc for purposes of enquiry

14 (1) If the Inland Revenue give notice of enquiry into a land transaction return, they may by notice in writing require the purchaser--

(a) to produce to them such documents in his possession or power, and

(b) to provide them with such information, in such form,

as they may reasonably require for the purposes of the enquiry.

(2) A notice under this paragraph (which may be given at the same time as the notice of enquiry) must specify the time (which must not be less than 30 days) within which the purchaser is to comply with it.

(3) In complying with a notice under this paragraph copies of documents may be produced instead of originals, but--

(a) the copies must be photographic or other facsimiles, and

(b) the Inland Revenue may by notice require the original to be produced for inspection.

A notice under paragraph (b) must specify the time (which must not be less than 30 days) within which the purchaser is to comply with it.

(4) The Inland Revenue may take copies of, or make extracts from, any documents produced to them under this paragraph.

(5) A notice under this paragraph does not oblige a purchaser to produce documents or provide information relating to the conduct of--

(a) any pending appeal by him, or

(b) any pending referral to the Special Commissioners under paragraph 19 to which he is a party.

Appeal against notice to produce documents etc

15 (1) An appeal may be brought against a requirement imposed by a notice under paragraph 14 to produce documents or provide information.

(2) Notice of appeal must be given--

(a) in writing,

(b) within 30 days after the issue of the notice appealed against,

(3) An appeal under this paragraph shall be heard and determined in the same way as an appeal against an assessment.

(4) On an appeal under this paragraph the Commissioners--

(a) shall set aside the notice so far as it requires the production of documents, or the provision of information, that appears to them not reasonably required for the purposes of the enquiry, and

(b) shall confirm the notice so far as it requires the production or documents, or the provision of information, that appears to them reasonably required for the purposes of the enquiry.

(5) A notice that is confirmed by the Commissioners (or so far as it is confirmed) has effect as if the period specified in it for complying was 30 days from the determination of the appeal.

(6) The decision of the Commissioners on an appeal under this paragraph is final.

Penalty for failure to produce documents etc

16 (1) A person who fails to comply with a notice under paragraph 14 (notice to produce documents etc for purposes of enquiry) is liable--

(a) to a penalty of £50, and

(b) if the failure continues after a penalty is imposed under paragraph (a) above, to a further penalty or penalties not exceeding the amount specified in sub-paragraph (2) below for each day on which the failure continues.

(2) The amount referred to in sub-paragraph (1)(b) is--

(a) £30 if the penalty is determined by an officer of the Board, and

(b) £150 if the penalty is determined by the court.

(3) No penalty shall be imposed under this paragraph in respect of a failure at any time after the failure has been remedied.

Amendment of self-assessment during enquiry to prevent loss of tax

17 (1) If at a time when an enquiry is in progress into a land transaction return the Inland Revenue form the opinion--

(a) that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and

(b) that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

they may by notice in writing to the purchaser amend the assessment to make good the deficiency.

(2) In the case of an enquiry that under paragraph 13(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above applies only so far as the deficiency is attributable to the amendment.

(3) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period--

(a) beginning with the day on which notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.

Amendment of return by taxpayer during enquiry

18 (1) This paragraph applies if a return is amended under paragraph 6 (amendment by purchaser) at a time when an enquiry is in progress into the return.

(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.

(3) So far as the amendment affects the amount stated in the self-assessment included in the return as the amount of tax payable, it does not take effect while the enquiry is in progress and--

(a) if the Inland Revenue state in the closure notice that they have taken the amendments into account and that--

(i) the amendment has been taken into account in formulating the amendments contained in the notice, or

(ii) their conclusion is that the amendment is incorrect,

the amendment shall not take effect;

(b) otherwise, the amendment takes effect when the closure notice is issued.

(4) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period--

(a) beginning with the day on which notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.

Referral of questions to Special Commissioners during enquiry

19 (1) At any time when an enquiry is in progress into a land transaction return any question arising in connection with the subject-matter of the enquiry may be referred to the Special Commissioners for their determination.

(2) Notice of referral must be given--

(a) jointly by the purchaser and the Inland Revenue,

(b) in writing,

(3) The notice of referral must specify the question or questions being referred.

(4) More than one notice of referral may be given under this paragraph in relation to an enquiry.

(5) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period--

(a) beginning with the day on which the notice of enquiry was given, and

(b) ending with the day on which the enquiry is completed.

Withdrawal of notice of referral

20 (1) The Inland Revenue or the purchaser may withdraw a notice of referral under paragraph 19 by notice in accordance with this paragraph.

(2) Notice of withdrawal must be given--

(a) in writing,

(b) to the other party to the referral and to the Special Commissioners,

Effect of referral on enquiry

21 (1) While proceedings on a referral under paragraph 19 are in progress in relation to an enquiry--

(a) no closure notice shall be given in relation to the enquiry, and

(b) no application may be made for a direction to give such a notice.

(2) For the purposes of this paragraph proceedings on a referral are in progress where--

(a) notice of referral has been given,

(b) the notice has not been withdrawn, and

(3) For the purposes of sub-paragraph (2)(c) a question referred is finally determined when--

(a) it has been determined by the Special Commissioners, and

(b) there is no further possibility of the determination being varied or set aside (disregarding any power to grant permission to appeal out of time).

Effect of determination

22 (1) The determination of a question referred to the Special Commissioners under paragraph 19 is binding on the parties to the referral in the same way, and to the same extent, as a decision on a preliminary issue in an appeal.

(2) The determination shall be taken into account by the Inland Revenue--

(a) in reaching their conclusions on the enquiry, and

(b) in formulating any amendments of the return required to give effect to those conclusions.

(3) Any right of appeal under paragraph 35 (appeals against assessments etc) may not be exercised so as to reopen the question determined except to the extent (if any) that it could be reopened if it had been determined as a preliminary issue in that appeal.

Completion of enquiry

23 (1) An enquiry under paragraph 12 is completed when the Inland Revenue by notice (a "closure notice") inform the purchaser that they have completed their enquiries and state their conclusions.

(2) A closure notice must either--

(a) state that in the opinion of the Inland Revenue no amendment of the return is required, or

(b) make the amendments of the return required to give effect to their conclusions.

(3) A closure notice takes effect when it is issued.

Direction to complete enquiry

24 (1) The purchaser may apply to the General or Special Commissioners for a direction that the Inland Revenue give a closure notice within a specified period.

(2) Any such application shall be heard and determined in the same way as an appeal.

(3) The Commissioners hearing the application shall give a direction unless they are satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.

Part 4 Revenue determination if no return delivered

Determination of tax chargeable if no return delivered

25 (1) If in the case of a chargeable transaction no land transaction return is delivered by the filing date, the Inland Revenue may make a determination (a "Revenue determination") to the best of their information and belief of the amount of tax chargeable in respect of the transaction.

(2) Notice of the determination must be served on the purchaser, stating the date on which it is issued.

(3) No Revenue determination may be made more than six years after the effective date of the transaction.

Determination to have effect as a self-assessment

26 (1) A Revenue determination has effect for enforcement purposes as if were a self-assessment by the purchaser.

(2) In sub-paragraph (1) "for enforcement purposes" means for the purposes of the following provisions of this Part of this Act--

(a) the provisions of this Schedule providing for tax-related penalties;

(b) section 87 (interest on unpaid tax);

-- Back --

Stat