Collection of one of the oldest taxes in the land is about to be thrust into the 21st century and beyond. The Inland Revenue, in consultation with other interested bodies, is undertaking the large and complex task of modernising stamp duty for land and buildings in the UK, and the onset of e-conveyancing reinforces the importance of getting it right.
The Revenue is working closely with HM Land Registry, Registers of Scotland and Land Registers of Northern Ireland to ensure that the modernised stamp duty regime dovetails with e-conveyancing systems as they are developed over the next few years.
“Electronic conveyancing-systems will simplify the conveyancing process, including electronic collection of stamp duty for the transactions that can be dealt with by those systems,” a spokesperson for the Inland Revenue said.
“However, the regime that we put in place for the administration of stamp duty from late 2003 will need to be compatible with the current paper-based registration process as well as future e-conveyancing systems.”
In light of the transition from a charge on documents to a charge on residential and commercial transactions, the Revenue is actively considering a range of channels for the notification and payment of stamp duty so that clients will be offered a choice of methods in meeting their obligations.
These include:
- Manually filled forms (which will be scanned)
- Computer-generated forms (which will be scanned)
- Direct e-channels
The Revenue is also working with commercial providers of legal case-management software to ensure that the new notification form can be incorporated into those software packages.
The new system should provide consistency in terms of the time it takes to process stamp duty information and payments, since the capture of data will be largely automated and less sensitive to fluctuations in the numbers of forms being submitted during the year.
Stamp duty will continue to be payable upon completion, and solicitors and conveyancers are expected to continue to handle the duty on behalf of their clients.
The Revenue has said that when the reform is complete, consumers will enjoy a streamlined process, with standard notification taking the place of submission of the documents. In due course, electronic systems will make the housebuying process quicker and more efficient.
One of the key drivers for modernising stamp duty is the issue of avoidance. Forecasts published in the Budget 2002 estimated that the additional yield would be £450m in the first full year, rising to £600m pa thereafter.
Homebuyers need to be aware that, from late 2003, the Revenue will be making inquiries into a small proportion of purchases to ensure that the right amount of stamp duty is being paid. It is consulting on these inquiry procedures, and will be producing full guidance for homebuyers and solicitors later next year.
Representatives from a wide variety of groups, including the Law Society and the British Property Federation, are actively involved in the consultation, and can use this process to make the government aware of anything that they feel needs to be made clearer.
The Revenue has maintained that these meetings have proved to be very informative.
The government has published two consultative documents during this year and has invited responses on a number of issues. The responses received so far have increased the governments understanding of the issues facing the property sector.
The deadline for responses is 24 February 2003. However, in view of the likely timing of the Finance Bill 2003, respondents are encouraged to reply before this date. Implementation will take place late next year.
Further reading:
The draft legislation, the associated commentary, and a summary of the responses received on the original consultative document.
Details of the consultation process, including the original consultative document.
References: Propert-e News 16/12/02
