Most people believe that when property is given away or transferred to a family member it is not a third party sale.
They also believe that such operations do not require professional help or extra costs.
In fact, you need to handle property transactions with the same care when property is transferred.n particular, when transferring properties, extra attention to detail is required.
Stamp Duty Land Tax (SDLT) can still be triggered when a property is gifted.
Also, pay special attention to updating the Land Registry on changes of ownership and filing SDLT returns with HMRC.
Client Wang purchased a property from his son.
He checked various information in advance and believed that SDLT should be paid £4,000 at the time of purchase. But he did not lodge an SDLT return with HMRC.
He then lodged a TR1 form with the Land Registry and paid £200. Pharaoh mistakenly believed that the £4,000 should be handed over to the Land Registry, and the SDLT5 certificate was not attached when filling out the TR1 form, so the form was not granted for processing.
Wang thought it was easy to buy a property from his son, and he didn’t need accountants and lawyers to help him. He said that filling out these forms was very easy, and it was impossible to make mistakes as long as it was checked several times.
Unfortunately, things didn’t turn out the way he imagined.
Due to the wrong operation of Pharaoh, he was subject to a late declaration penalty of 200 pounds and nearly 50 pounds of interest, which was not enough to be handed over to the first level tax court to intervene.
After several communications with the Land Registry Helpline, the SDLT funds were finally returned.
The money was finally given to HMRC and the SDLT return was re-filed.
For the whole process, Wang has his own explanation for the delay in submitting the declaration form:
1. Taxes are unfamiliar to home buyers, and mistakes should be understood.
2. Unfamiliar with the reporting process, no more funds to HMRC after handing over to the wrong agency.
Late filing penalties and interest due to unfamiliarity with the filing process is not a sufficient defense.
First, if taxpayers claim that they do not have enough funds to pay the appropriate department, then the court will review their bank balances to further prove whether this is the case.
After some investigation, FTT found that the Wang did have enough funds to make up the money to the correct institution.
Therefore, Pharaoh’s explanation does not hold. He still has to bear all the fines and interest for the delay.
Penalties for unfamiliarity with taxes are a result that none of us want to see.
If you also plan to DIY to purchase properties or other assets, it is recommended that you consult with professional institutions and seek tax support, so as to avoid unnecessary mistakes due to self-awareness.