SDLT goes online

The Inland Revenue (IR) intends to launch a facility to submit SDLT returns over the internet on 6 April 2005.

At a recent meeting attended by representatives of the various UK Law Societies, Registers of Scotland and HM Land Registry, the IR demonstrated how online submission of returns is intended to work.

All change?

Online submission will not (yet) be compulsory – so, even after 6 April 2005, paper SDLT returns may still be posted to Netherton – though the IR will be gently encouraging it.

However, as from 6 April 2005, you will not be able to create new SDLT forms using the IR’s existing online facility. Any forms “in progress” or submitted on that date will be saved for 60 days and after that they will be deleted. The IR will issue guidance for this.

How it will work

The overall framework is based on the online submission of income tax returns. There will be a facility on the IR’s website for registered users to make the submission, though case management and other software vendors may register too – so that the facility can be incorporated into their products without users having to visit the IR website.

In short, the data you enter on screen is coded into XML format, then transmitted through the “Government gateway” and directed to the IR’s central computers.

An “IR Mark” – a form of encryption – will be generated so that the taxpayer and the IR can check that the data has not been corrupted or interfered with during transmission.

Once received, the IR will send, “usually within a few seconds”, an email to the submitter with a “submission receipt” and confirmation of the unique transaction reference number (UTRN).

“M” is for SDLT

The UTRN must be written on the back of the cheque or referred to in the CHAPS transfer (or inserted on an accompanying payment slip) so that the payment can be matched to the SDLT return.

The UTRN will always be followed by an “M”, which tells the IR that the payment is for SDLT and not any other tax. Why an “M”? Maybe it stands for mysterious – after all, the IR works in mysterious ways…

Who signs?

1. The agents complete the return and send it (or, optionally, a list of the data in it) to the client (can be by email, fax or post).
2. The client approves the return/data (again this may be by return email – a “wet” signature will not be required).
3. The agents then add the effective date and submit it to the IR.

The agents will need to declare that they have been authorised by their client to submit the return, though tax liability remains with the client.

The exact wording of that declaration is not yet finalised, though there may be more concerns about that in England than in Scotland where solicitors are more used to signing on behalf of clients.

Proposed benefits

As data you enter on one screen is validated before you can progress to the next (so, for example the possibility of entering a date in the wrong format is eliminated), the system prevents returns being submitted that are in the wrong format.

Some information, such as the agents’ details, is “pre-populated” from the user’s registration ID. Other information is only requested depending on previous answers. The return may be saved in PDF or HTML format and context-sensitive help should be available.

The IR system will also compare addresses against their Disadvantaged Area database to suggest that relief may be available – but the IR has (as yet) not agreed to drop its disclaimer and guarantee the availability of that relief. The various Law Societies have made strong representations that it does so.

All this (in theory) should reduce the number of SDLT8 requisitions and allow SDLT5 certificates to be issued (but still in paper form for now) within a few days. The system is expected to deal with the majority of cases.

The IR does not expect it to be perfect from day 1 and practitioners are encouraged to give feedback. As ever, time will tell…

Iain Doran and Danny Freedman, D&W.