Stamp duty – Failure to deliver land transaction return on time – Penalty – Section 97 of Finance Act 2003 – Reasonable excuse – Whether reliance on solicitor to send return capable of amounting to reasonable excuse for failure – Appeal allowed
In August 2009, the appellant completed the purchase of a flat. The firm of solicitors that carried out her conveyancing failed to submit a land transaction return to HM Revenue & Customs (HMRC) in respect of stamp duty within 30 days of that transaction, in breach of section 76 of the Finance Act 2003; the return should have been filed in mid-September 2009 but was not filed until late October. As a result, HMRC imposed a flat rate penalty on the appellant of £100. Meanwhile, the firm of solicitors was closed down by the Solicitors Regulation Authority.
The appellant contended that she had reasonably relied on her solicitor to perform the necessary formalities and that since she had been unable to contact it by phone or to obtain from it an update on how the transaction was progressing, the matter had been beyond her control. She claimed that this constituted a “reasonable excuse” within section 77(2) of the 2003 Act. The respondents contended that, under the legislation, the purchaser was responsible for ensuring that the return was received on time, even if an agent had been instructed.
Held: The appeal was allowed.
Whether a purchaser had a “reasonable excuse” for failing to file a land transaction return in time fell to be considered in the light of all the circumstances of the particular case. Unlike the position under the VAT legislation, no provisions in the 2003 Act specifically excluded reliance on a third party from being a reasonable excuse for the purposes of stamp duty land tax. Therefore, in the absence of a specific provision to the contrary, reliance on a third party could amount to a reasonable excuse: Rowland v HM Revenue & Customs [2006] STC (SCD) 536 applied. Notwithstanding the considerable difficulties that the appellant had faced in dealing with the solicitor that was purportedly acting for her, it had been reasonable for her to rely on it to submit the return to HMRC. Given the necessity to complete and file various forms as part of the conveyancing exercise, there was no reason for the appellant to think that the solicitor would fail to submit the return on her behalf within the statutory time limit. Since it had been reasonable for the appellant to rely on her solicitor and that reliance had led to the failure to file the return on time, the appellant had a reasonable excuse for the entire period of default and should, pursuant to section 77(2), be deemed not to have failed to file the return on time.
The case was decided on the written submissions of the parties.
Sally Dobson, barrister
