SDLT 2: Personal presentation

Guidelines as to when the special arrangements for personal presentation of stamp duty land tax applications may be invoked, and what to do

The Journal, February 2004, page 53

A transaction cannot be registered or recorded in any register maintained by the Keeper of the Registers of Scotland without either an Inland Revenue certificate that an SDLT return has been made or a self-certificate that no land transaction return is required (Finance Act 2003, section 79).

It should be noted that the registers here include the Register of Sasines, the Land Register and the Books of Council and Session.

In Scotland, a purchaser (or tenant under a lease of more than 20 years) obtains no property rights in the land at all until such time as his/her title is registered in the Land Register. There is thus a gap between completion and registration, during which period purchasers in Scotland face the risk of losing the property if, despite the purchaser having paid the price, the sellers become insolvent prior to the purchasers’ title being registered or if fraudulent sellers re-convey to a third party acting in good faith (but who has been duped by the seller) before registration of the first purchaser’s title.

In many transactions, the risk to the purchaser is addressed in part by the issue of letters of obligation by the seller’s solicitors. In some cases, for example when purchasing from a receiver, no letters of obligation are granted. In other cases, for example where the seller is a company, letters of obligation are granted but on behalf of the client.

In such cases, the purchaser or tenant may wish to register immediately and could be prejudiced by the delay inherent in submitting a return and receiving a certificate in each case by post. Special arrangements have been made to permit personal presentation of the SDLT returns in Edinburgh in these cases.

The solicitor wishing to present personally must complete the declaration (the form of which appears on the Society’s website) setting out why the “same day” service is required. This should be presented in person together with the completed form SDLT 1 (and any supplementary returns required) and payment (or evidence thereof) to the Edinburgh Stamp Office within two working days of the effective date of the transaction. Assuming that the returns are in order, the Edinburgh Stamp Office will give the solicitor a handwritten SDLT certificate.

The date on which the land transaction return was presented to the Edinburgh Stamp Office counts as the date on which the transaction was notified to the Inland Revenue.

The SDLT certificate can then be taken to the registers with the documents so that registration can take place.

The Edinburgh Stamp Office will send the land transaction return(s) to Netherton and they will be processed in the usual manner.

When can the special arrangements be used?

The intention is not to replace the usual process for all transactions in Scotland.

Assuming that the new system works as planned it should be possible for a certificate to be received by the purchaser’s solicitors well within the usual 21 day period of letters of obligation.

The special arrangements are intended to focus on transactions where there is a real risk to the purchaser if the transaction is not registered on the day of settlement or the next day.

The special arrangements are intended to apply to transactions where there are no letters of obligation or, as in the case where the seller is a company, where letters of obligation are granted but only on behalf of the client.

Therefore the special arrangements for personal presentation will be available for:

1. any transaction where the seller is a corporate entity and the seller’s solicitor has not given a solicitor’s personal letter of obligation in respect of the charges register and the company file;
2. any other transaction where the seller’s solicitor has been requested to give a solicitor’s personal letter of obligation but has refused to do so;
3. any transaction where the purchaser needs to register ownership on or before obtaining access to the transaction funding.

In all cases, the special arrangements can only be used if the SDLT returns are presented to the Edinburgh Stamp Office within two working days of the effective date of the transaction.

It should be noted that the special arrangements can also be used for the grant of a lease where the landlord is a corporate entity, provided that registration is required to give the tenant a real right.

The fact that no SDLT is payable due to the availability of a relief such as group relief will not prevent the special arrangements from being available.