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Overview

When Stamp Duty Reserve Tax (SDRT) is due on an agreement to transfer shares, HMRC must be notified and the tax must be paid by the due date - known as the 鈥榓ccountable date鈥�.

If the notice and payment are late, or if either is incorrect, we will usually charge you a penalty. In addition, interest is normally charged on the tax that鈥檚 overdue.

Notification and payment deadlines

Where SDRT is due on an agreement to transfer shares there鈥檚 a deadline for notifying us and paying the tax. The deadline depends on whether the transfer was made through the CREST electronic system or an 鈥榦ff-market鈥� system other than CREST.

You鈥檙e responsible for paying the SDRT if you鈥檙e a stockbroker or a similarly qualified person buying shares for someone else. If you鈥檙e buying shares for yourself you鈥檙e responsible for paying the SDRT you owe.

Deadline for share transfers involving CREST

The deadline for notifying us about a transfer of shares and for paying the tax is 14 calendar days after the date when the trade took place. This deadline applies to:

• CREST transfers (where notification and payment to HMRC is automatic)
• any transfer that could have been made through CREST but was not

Deadline for off-market share transfers

When shares are transferred off-market using a system other than CREST - and the transfer could not have been made through CREST - the deadline for notifying us and paying any tax due is the seventh day of the month following the month when the trade took place.

For example, if a trade took place on 19 April 2020 then the deadline would be 7 May 2020.

If the transfer could have been made through CREST the deadline is 14 days after the transaction - the same as if it had been made through CREST.

You must work out the tax due and send the notification and payment to us. There are several different ways of paying HMRC, including electronically. If you do not notify us and pay any tax due by the deadline then it鈥檚 likely that a penalty will be charged.

How to avoid penalties

We expect you to take 鈥榬easonable care鈥� in completing SDRT notices and making payment at the correct time. If you took reasonable care but still made a mistake, we may not charge a penalty or the amount of the penalty may be reduced.

Examples of reasonable care include:

• making sure your SDRT notice is accurate and sending it into us on time - this includes ensuring all claims to reliefs and calculations are correct
• keeping sufficient records to support your SDRT notice and any claims to reliefs
• providing us with all the information we need when we ask
• asking us if you鈥檙e not sure about anything and following any advice they give you

If you find you鈥檝e made a mistake - or not told us something you should have - you should tell us immediately. This may reduce the amount of penalty you face or may mean you do not have to pay one at all. What reasonable care means will depend on your circumstances.

If you do not agree with a penalty we has charged your company or organisation, you can appeal it.

Penalties for missing a notification or payment deadline on or after 1 January 2015

Late notification

You are liable to a penalty if you fail to notify us by the notification deadline date. The penalty starts from the day after the notification deadline date. You鈥檒l get an initial penalty of 拢100 and you鈥檒l have to pay more if the delay continues.

Summary of the penalties

When the penalty becomes due	Penalty due
From the start of the penalty date	A penalty of 拢100
6 months from the penalty date	拢300 or 5% of the undeclared tax, whichever is greater. This is in addition to the initial 拢100 penalty above
12 months from the penalty date	拢300 or 5% of the undeclared tax whichever is greater. This is in addition to the penalties above

We can also charge additional daily penalties if your failure to notify the transaction continues for more than 3 months.

When we decide to charge daily penalties we must:

• give notice in writing that we intend to start charging daily penalties
• tell you the date when the penalties start

The date the penalties start, specified in the notice, may be earlier than the date of the notice, but must be at least 3 months after the penalty date.

The penalty is 拢10 for each day that the notification remains outstanding, up to a period of 90 days. The 90 days start on the date specified in the notice.

We will take into account your previous notification history when deciding if daily penalties apply.

The amount of the penalty 12 months from the penalty date depends on the reason for the delay, such as you withheld information deliberately. Where we do not know the reason you will normally be charged the minimum penalty of 5% of the unpaid tax or 拢300 as stated in the summary of the penalties table.

Further guidance about how HMRC calculates a penalty, the penalty ranges and penalty reductions can be found in the .

Example

Your notification is received 16 months late, you did not withhold information deliberately and the tax due is 拢20,000. You will be charged the following penalties:

• 拢100 initially
• then a further 拢1,000 because your notification is 6 months late, (5% of the undeclared tax)
• plus a further 拢1,000 because your notification is 12 months late, (5% of the undeclared tax)

leading to a total late notification penalty of 拢2,100.

Late payment

You are liable to a penalty if you fail to pay us by the payment due date.

Penalty date	Penalty due
31 days after the due date for payment	5% of the unpaid tax
5 months after the penalty date (5 months and 31 days after the due date for payment)	A further 5% of the unpaid tax
11 months after the penalty date (11 months and 31 days after the due date for payment)	A further 5% of the unpaid tax

Example

The tax due is 拢20,000 and your payment is 16 months late. You will be charged the following penalties:

• 拢1,000
• then a further 拢1,000 because your payment is 5 months after the penalty date, (5% of the unpaid tax)
• then a further 拢1,000 because your payment is 12 months after the penalty date, (5% of the unpaid tax)

leading to a total late payment penalty of 拢3,000.

You will be charged the late payment penalty in addition to the late notification penalty. For the transaction to which the two examples relate, the total of the two penalties charged will be 拢5,100.

Penalties if you miss a deadline before 1 January 2015

Late payment and notification within 12 months of the deadline

If you notify us and pay SDRT within 12 months of the deadline, the penalty will be the lesser of 拢100 or the amount of tax that鈥檚 due.

You鈥檒l usually also have to pay interest on the tax that鈥檚 due - as well as the outstanding tax.

This penalty potentially applies to each transaction for which you miss the deadline.

Late payment and notification more than 12 months after the deadline

If you notify us and pay the SDRT more than 12 months after the deadline, an additional penalty will be charged.

This penalty can be as much as the total amount of tax that鈥檚 due, but it may be reduced. The amount it鈥檚 reduced by will depend on:

• the reasons for the delay or error
• how well you co-operated with us to put things right
• the seriousness of the issue

You鈥檒l have the chance to give the reasons why you think the penalty should be reduced and to negotiate an agreement with us on how much of the penalty should be paid.

The penalty for notifying and paying us for a transaction more than 12 months after the deadline would be the total of the following:

• 拢100
• another amount that could be as much as the tax that鈥檚 due

You also have to pay interest on the tax that鈥檚 due - as well as the outstanding tax.

The way penalties are calculated for incorrect notices changed for all transactions made on or after 1 April 2010. This brings SDRT charges in line with penalties for other taxes.

Penalties for incorrect notifications or payments

An SDRT notification or payment might be wrong because of a mistake or something done deliberately.

HMRC audits and inspects CREST users and others involved in the share transfer market. If they find you鈥檝e made an error in an SDRT notification, or paid the wrong amount of tax, you鈥檒l probably have to pay a penalty as well as any tax that鈥檚 due. You鈥檒l also have to pay interest.

This also applies if you find an error yourself. If this happens, you must contact us to report the error and explain how it occurred.

How the penalty is worked out

The penalty can be as much as the total amount of tax that鈥檚 due, but it may be reduced. The amount it鈥檚 reduced by depends on whether your error was:

• carelessness - for example, a mistake on the SDRT notice
• deliberate - you submitted an SDRT notice that you knew was incorrect
• deliberate and concealed - such as intentionally sending incorrect information and taking steps to hide the error

If you disagree with a penalty amount

Negotiating an agreement with HMRC

You鈥檒l have the chance to say why you think the penalty should be reduced and to negotiate an agreement with us about how much it should be. In most cases agreements are reached and you鈥檒l be asked to confirm the agreement in writing by signing and returning a formal letter.

If you cannot reach an agreement

If you cannot agree with us over how much the penalty should be, we will issue a 鈥榙etermination notice鈥�. This will state how much the penalty should be, based on HMRC鈥檚 best judgement. If you still do not agree you can appeal.

You cannot appeal against a late payment interest charge

Appealing against a penalty

You have the right to appeal against any SDRT penalty that you disagree with. You must do this in writing within 30 days of receiving the penalty notice.

Include any reference number you have in your appeal letter. Mark your letter 鈥楽tamp Duty Reserve Tax鈥� and send it to HMRC Birmingham Stamp Office.

Most appeals are settled by reaching an agreement with us. But if you鈥檙e unable to agree a settlement there are other options. You can ask us to review their decision, or you can ask an independent tribunal to consider your appeal.

Find out more about penalties you may have to pay HMRC.

Interest on late payments

If you pay SDRT late, you鈥檒l have to pay interest on the amount of tax that鈥檚 overdue. HMRC charges interest at the official rate set by HM Treasury from the date when the tax became due until the date when it鈥檚 actually paid.

If you disagree with a late payment interest charge

Interest is not a penalty - it鈥檚 a commercial charge to compensate us for not getting the money when they should have. So you cannot appeal against the charge.

But if you think you should not be charged any interest, or if you think you鈥檝e been charged too much, you can write to the SDRT team at the HMRC Birmingham Stamp Office to explain why.

Mark your letter 鈥楽tamp Duty Reserve Tax鈥� and include any reference number you have.