UK: Stamp Duty Changes

Last Updated: 3 May 1999
Stamp Duty Changes

In the last edition of Tax Insight, we focused on the announcement made by the Chancellor in his pre-Budget statement that the Government was considering additional measures in the area of stamp duty compliance. The indications were that the interest and penalty provisions intended to deal with stamp duty non-compliance would be strengthened in order to deal in particular with the "voluntary" nature of stamp duty and, in addition, the "loophole" allowing documents executed and held offshore to avoid penalties and interest for late stamping.

As the press releases accompanying the recent Budget confirmed, the Finance Bill contains detailed provisions which overhaul the interest, penalty and (to a certain extent) the appeals procedure in particular, along with other changes that the Government has indicated are "administrative" in nature (although this is debatable!) What is perhaps surprising however is that some of the provisions appearing in the Finance Bill intended to address compliance issues may have less of a sting than was feared by many practitioners.


The current position is that penalties and interest for late stamping of a document run from the date that is thirty days after the date of execution of the document, except where the document has been executed and held offshore. In the latter case, the thirty day period starts to run from the date that the document is brought into the UK.

As we commented in the last edition of Tax Insight, these rules have allowed purchasers of assets (other than shares/securities) to defer the payment of stamp duty in some situations until such time as it becomes clear that there is a need to enforce the document in question. If the document has been executed and held offshore until that time, penalties and interest can be avoided.

The Finance Bill sets out new provisions under which interest on unpaid stamp duty will run from the date that is thirty days after the date of execution of a document, whether the document was executed in the UK or elsewhere. Executing and holding a document offshore will therefore no longer be effective to prevent interest from running in respect of stamp duty paid late.

Perhaps surprisingly, however, penalties for the late payment of stamp duty will continue to run from the date that is thirty days after the date of execution of an instrument (where it is executed in the UK) or thirty days after the day on which it is first brought into the UK (where the instrument is executed outside the UK). Unlike the interest charge therefore, the penalty charge will not affect documents executed offshore unless they are not stamped within thirty days of the date they are brought into the UK. This means that the interest charge will be the only deterrent against the continuing practice of executing and holding documents offshore.

The Finance Bill also provides that the interest rate will in future be set under section 178 Finance Act 1989 (a general provision for setting the rates of interest on tax paid late). Whether or not a taxpayer takes the view that the risk of interest arising on stamp duty paid late is one worth taking will of course depend upon the circumstances of a particular case. However, taxpayers who believe that there is little likelihood of them needing to bring a document into the UK to enforce or register it, or who consider that they are likely to be able to obtain a competitive return on the money they would otherwise have committed to stamp duty may still consider it worthwhile to execute and hold documents offshore as they have done in the past.

One other piece of good news is that the new provisions described above will apply only to documents executed on or after 1 October 1999. Until the publication of the Finance Bill, there was a concern that these provisions might contain an element of retrospection, and potentially catch documents currently held offshore. These fears have now been dispelled.

The Government has also taken the opportunity in the Finance Bill to update and overhaul the penalty system more generally. Part of this involves their stated objective of bringing penalties up to more realistic modern levels. Penalties for late stamping for example are set at the lesser of the amount of unpaid duty or £300 where the instrument is presented for stamping within one year of the end of the relevant thirty day period. However, if an instrument is presented for stamping outside this time period, the penalty is potentially the greater of the amount of the unpaid duty or £300. This could mean significant additional costs if documents are not submitted for stamping within one year and thirty days of their execution. It is worth mentioning that penalties for late stamping will be subject to mitigation if the Inland Revenue thinks fit.

Further, no penalty will be payable if there is a "reasonable excuse" for the delay in presenting the instrument for stamping. As a practical matter, it will be interesting to see whether the Stamp Office will publish any guidance as to what they may consider to be a reasonable excuse for a failure to present a document for stamping within the relevant time period.

On an administrative level, taxpayers will be able to require the Stamp Office to formally adjudicate the level of penalties for late stamping (or indeed whether any such penalty should be charged in a given circumstance). If the taxpayer is dissatisfied with the result of an adjudication (whether in relation to the chargeability of the document generally or in relation to the penalty imposed) the taxpayer will have a right of appeal to the High Court.

This is consistent with the historic appeals procedure in stamp duty cases, which is to the High Court by way of case stated. However, in cases where tax mitigation in particular may be in issue, this procedure can prove unsatisfactory, given the absence of both an independent tribunal to make a finding of facts at a level below the High Court and of direct evidence and cross examination. This means that it is often uneconomic and administratively difficult for a taxpayer to appeal stamp duty adjudications, however well founded their arguments may be in principle.

The Finance Bill does introduce one new possible line of appeal in limited circumstances however. Where the appeal relates only to the penalty payable for late stamping, it will (in relation to instruments executed from October this year) be possible for the taxpayer to bring the appeal before the Special Commissioners of the Inland Revenue. There will be a further right of appeal (for the taxpayer only) to the High Court if necessary.

The introduction of a right of appeal to the Special Commissioners is to be welcomed as although proceedings before the Special Commissioners are formal, full facts can be adduced and findings of facts can be made. However, it should be noted that this new right of appeal to the Special Commissioners extends only to the amount of any penalty (and not to the underlying assessment of duty made by the Stamp Office). One wonders whether the opportunity could have been taken to widen the availability of appeals to the Special Commissioners against adjudication more generally, which would have opened up the possibility of taxpayers being in a position to challenge more readily the Stamp Office's assessment of duty in relevant cases.

In particular, it remains the case that appeals cannot be made in respect of stamp duty assessments unless the relevant stamp duty, together with any applicable interest and penalties, has first been paid. This is particularly interesting in the light of the Chancellor's "compatibility" statement on the cover sheet of the Finance Bill. Some commentators have suggested that this restriction to the right to appeal may be a contravention of Article 6 of the European Convention.

One final point on the subject of penalties is that the regime in relation to agreements for lease presented for stamping at the same time as the leases executed in pursuance of those agreements has been tightened up. Agreements for lease are stampable, but no penalty is currently payable if the agreement is presented for stamping at the same time as the lease and within thirty days of execution of the lease. The Finance Bill introduces a long stop period of six months after the date of execution of an agreement for lease after which interest will be payable in relation to late stamping of that agreement, even where presented with the lease within thirty days of execution of the lease.

Roundings and Small Duty Changes

The Finance Bill also sets out the new rounding provisions that will apply when calculating the amount of stamp duty payable in respect of a document. Again, these changes will apply from 1 October 1999. Currently, the consideration for a document stamped by reference to its value should be rounded to the nearest whole £100 (or £50 in relation to lease duty) in order to calculate the amount of duty payable. For example, duty may be payable at the rate of £1.00 per £100 or part thereof. From 1 October 1999, stamp duty will be expressed as a straightforward percentage of the consideration and coupled with this change will be a new system of roundings, under which stamp duty will always be rounded upwards to a multiple of £5. In addition, the various fixed stamp duties (mostly £0.50) will be increased to £5.

A further point which emerges from the Finance Bill (and which was what not apparent in the Budget Press Release) is the sweeping away of most of the small rates of duty payable in relation to rental payments on leases not exceeding £500 per annum. From October this year, the rate of duty applicable to rental payments will (except in relation to leases for a term of less than seven years or indefinite terms) depend only upon the length of the term of the lease and not upon whether or not the rent is less than £500 per annum.

Whilst these changes may seem to be de minimis, one suspects that they are in aggregate likely to increase the stamp duty revenue to the Treasury considerably. In particular, taxpayers will need to take care not to be caught out by the new methods of calculation of stamp duty.

One final point: the changes proposed in the Finance Bill are to be implemented by substantial redrafting of and substitution of some of the existing legislative provisions relating to stamp duty. This inevitably involves slight changes to the wording of some of the relevant provisions. The extent to which this will raise new points or practical issues going forward remains to be seen.

For further information please contact Fiona Sutherland, e-mail: Click Contact Link , 7 Devonshire Square, Cutlers Gardens, London, EC2M 4YH, UK, Tel: + 44 171 655 1000

This article was first published in the Tax News - Special Finance Bill Edition issue of Hammond Suddards Tax News updates

The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.