Office of Public Sector Information
Section 78
1 (1) A land transaction return must—
(a) be in the prescribed form,
(b) contain the prescribed information, and
(c) include a declaration by the purchaser (or each of them) that the return is to the best of his knowledge correct and complete.
(2) In sub-paragraph (1) “prescribed” means prescribed by regulations made by the Inland Revenue.
(3) The regulations may make different provision for different kinds of return.
(4) Regulations under sub-paragraph (1)(b) may require the provision of information corresponding to any of the particulars formerly required under—
(a) Schedule 2 to the Finance Act 1931 (c. 28) (requirement to deliver particulars of land transactions in Great Britain), or
(b) section 244 of the Finance Act 1994 (c. 9) (corresponding provision for Northern Ireland).
(5) The return is treated as containing any information provided by the purchaser for the purpose of completing the return.
2 (1) References in this Part of this Act to the filing date, in relation to a land transaction return, are to the last day of the period within which the return must be delivered.
(2) References in this Part of this Act to the delivery of a land transaction return are to the delivery of a return that—
(a) complies with the requirements of paragraph 1(1) (contents of return), and
(b) is accompanied by payment of any tax required to accompany the return.
3 (1) A person who is required to deliver a land transaction return and fails to do so by the filing date is liable to a flat-rate penalty under this paragraph.
He may also be liable to a tax-related penalty under paragraph 4.
(2) The penalty is—
(a) £100 if the return is delivered within three months after the filing date, and
(b) £200 in any other case.
4 (1) A purchaser who is required to deliver a land transaction return in respect of a chargeable transaction and fails to do so within twelve months after the filing date is liable to a tax-related penalty under this paragraph.
This is in addition to any flat-rate penalty under paragraph 3.
(2) The penalty is an amount not exceeding the amount of tax chargeable in respect of the transaction.
5 (1) If it appears to the Inland Revenue—
(a) that a purchaser required to deliver a land transaction return in respect of a chargeable transaction has failed to do so, and
(b) that the filing date has now passed,
they may issue a notice requiring him to deliver a land transaction return in respect of the transaction.
(2) The notice must specify—
(a) the transaction to which it relates, and
(b) the period for complying with the notice (which must not be less than 30 days from the date of issue of the notice).
(3) If the purchaser does not comply with the notice within the specified period, the Inland Revenue may apply to the General or Special Commissioners for an order imposing a daily penalty.
(4) On such an application the Commissioners may direct that the purchaser shall be liable to a penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction.
(5) This paragraph does not affect, and is not affected by, any penalty under paragraph 3 or 4 (flat-rate or tax-related penalty for failure to deliver return).
6 (1) The purchaser may amend a land transaction return given by him by notice to the Inland Revenue.
(2) The notice must be in such form, and contain such information, as the Inland Revenue may require.
(3) Except as otherwise provided, an amendment may not be made more than twelve months after the filing date.
7 (1) The Inland Revenue may amend a land transaction return so as to correct obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise).
(2) A correction under this paragraph is made by notice to the purchaser.
(3) No such correction may be made more than nine months after—
(a) the day on which the return was delivered, or
(b) if the correction is required in consequence of an amendment under paragraph 6, the day on which that amendment was made.
(4) A correction under this paragraph is of no effect if the purchaser—
(a) amends the return so as to reject the correction, or
(b) after the end of the period within which he may amend the return, but within three months from the date of issue of the notice of correction, gives notice rejecting the correction.
(5) Notice under sub-paragraph (4)(b) must be given to the officer of the Board by whom notice of the correction was given.
8 (1) A purchaser who—
(a) fraudulently or negligently delivers in respect of a chargeable transaction a land transaction return which is incorrect, or
(b) discovers that a land transaction return delivered by him in respect of a chargeable transaction (neither fraudulently nor negligently) is incorrect and does not remedy the error without unreasonable delay,
is liable to a tax-related penalty.
(2) The penalty is an amount not exceeding the amount of tax understated, that is, the difference between—
(a) the amount of tax chargeable in respect of the transaction, and
(b) the amount that would have been chargeable on the basis of the return delivered.
9 (1) A purchaser who is required to deliver a land transaction return must—
(a) keep such records as may be needed to enable him to deliver a correct and complete return, and
(b) preserve those records in accordance with this paragraph.
(2) The records must be preserved for six years after the effective date of the transaction and until any later date on which—
(a) an enquiry into the return is completed, or
(b) if there is no enquiry, the Inland Revenue no longer have power to enquire into the return.
(3) The records required to be kept and preserved under this paragraph include—
(a) relevant instruments relating to the transaction, in particular, any contract or conveyance, and any supporting maps, plans or similar documents;
(b) records of relevant payments, receipts and financial arrangements.
10 (1) The duty under paragraph 9 to preserve records may be satisfied by the preservation of the information contained in them.
(2) Where information is so preserved a copy of any document forming part of the records is admissible in evidence in any proceedings before the Commissioners to the same extent as the records themselves.
11 (1) A person who fails to comply with paragraph 9 in relation to a transaction is liable to a penalty not exceeding £3,000, subject to the following exception.
(2) No penalty is incurred if the Inland Revenue are satisfied that any facts that they reasonably require to be proved, and that would have been proved by the records, are proved by other documentary evidence provided to them.
12 (1) The Inland Revenue may enquire into a land transaction return if they give notice of their intention to do so (“notice of enquiry”)—
(a) to the purchaser,
(b) before the end of the enquiry period.
(2) The enquiry period is the period of nine months—
(a) after the filing date, if the return was delivered on or before that date;
(b) after the date on which the return was delivered, if the return was delivered after the filing date;
(c) after the date on which the amendment was made, if the return is amended under paragraph 6 (amendment by purchaser).
(3) A return that has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) of the return under paragraph 6.
13 (1) An enquiry extends to anything contained in the return, or required to be contained in the return, that relates—
(a) to the question whether tax is chargeable in respect of the transaction, or
(b) to the amount of tax so chargeable.
This is subject to the following exception.
(2) If the notice of enquiry is given as a result of an amendment of the return under paragraph 6 (amendment by purchaser)—
(a) at a time when it is no longer possible to give notice of enquiry under paragraph 12, or
(b) after an enquiry into the return has been completed,
the enquiry into the return is limited to matters to which the amendment relates or that are affected by the amendment.
14 (1) If the Inland Revenue give notice of enquiry into a land transaction return, they may by notice in writing require the purchaser—
(a) to produce to them such documents in his possession or power, and
(b) to provide them with such information, in such form,
as they may reasonably require for the purposes of the enquiry.
(2) A notice under this paragraph (which may be given at the same time as the notice of enquiry) must specify the time (which must not be less than 30 days) within which the purchaser is to comply with it.
(3) In complying with a notice under this paragraph copies of documents may be produced instead of originals, but—
(a) the copies must be photographic or other facsimiles, and
(b) the Inland Revenue may by notice require the original to be produced for inspection.
A notice under paragraph (b) must specify the time (which must not be less than 30 days) within which the purchaser is to comply with it.
(4) The Inland Revenue may take copies of, or make extracts from, any documents produced to them under this paragraph.
(5) A notice under this paragraph does not oblige a purchaser to produce documents or provide information relating to the conduct of—
(a) any pending appeal by him, or
(b) any pending referral to the Special Commissioners under paragraph 19 to which he is a party.
15 (1) An appeal may be brought against a requirement imposed by a notice under paragraph 14 to produce documents or provide information.
(2) Notice of appeal must be given—
(a) in writing,
(b) within 30 days after the issue of the notice appealed against,
(c) to the officer of the Board by whom that notice was given.
(3) An appeal under this paragraph shall be heard and determined in the same way as an appeal against an assessment.
(4) On an appeal under this paragraph the Commissioners—
(a) shall set aside the notice so far as it requires the production of documents, or the provision of information, that appears to them not reasonably required for the purposes of the enquiry, and
(b) shall confirm the notice so far as it requires the production or documents, or the provision of information, that appears to them reasonably required for the purposes of the enquiry.
(5) A notice that is confirmed by the Commissioners (or so far as it is confirmed) has effect as if the period specified in it for complying was 30 days from the determination of the appeal.
(6) The decision of the Commissioners on an appeal under this paragraph is final.
16 (1) A person who fails to comply with a notice under paragraph 14 (notice to produce documents etc for purposes of enquiry) is liable—
(a) to a penalty of £50, and
(b) if the failure continues after a penalty is imposed under paragraph (a) above, to a further penalty or penalties not exceeding the amount specified in sub-paragraph (2) below for each day on which the failure continues.
(2) The amount referred to in sub-paragraph (1)(b) is—
(a) £30 if the penalty is determined by an officer of the Board, and
(b) £150 if the penalty is determined by the court.
(3) No penalty shall be imposed under this paragraph in respect of a failure at any time after the failure has been remedied.
17 (1) If at a time when an enquiry is in progress into a land transaction return the Inland Revenue form the opinion—
(a) that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and
(b) that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,
they may by notice in writing to the purchaser amend the assessment to make good the deficiency.
(2) In the case of an enquiry that under paragraph 13(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above applies only so far as the deficiency is attributable to the amendment.
(3) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which the enquiry is completed.
18 (1) This paragraph applies if a return is amended under paragraph 6 (amendment by purchaser) at a time when an enquiry is in progress into the return.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects the amount stated in the self-assessment included in the return as the amount of tax payable, it does not take effect while the enquiry is in progress and—
(a) if the Inland Revenue state in the closure notice that they have taken the amendments into account and that—
(i) the amendment has been taken into account in formulating the amendments contained in the notice, or
(ii) their conclusion is that the amendment is incorrect,
the amendment shall not take effect;
(b) otherwise, the amendment takes effect when the closure notice is issued.
(4) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which the enquiry is completed.
19 (1) At any time when an enquiry is in progress into a land transaction return any question arising in connection with the subject-matter of the enquiry may be referred to the Special Commissioners for their determination.
(2) Notice of referral must be given—
(a) jointly by the purchaser and the Inland Revenue,
(b) in writing,
(c) to the Special Commissioners.
(3) The notice of referral must specify the question or questions being referred.
(4) More than one notice of referral may be given under this paragraph in relation to an enquiry.
(5) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which the notice of enquiry was given, and
(b) ending with the day on which the enquiry is completed.
20 (1) The Inland Revenue or the purchaser may withdraw a notice of referral under paragraph 19 by notice in accordance with this paragraph.
(2) Notice of withdrawal must be given—
(a) in writing,
(b) to the other party to the referral and to the Special Commissioners,
(c) before the first hearing by the Special Commissioners in relation to the referral.
21 (1) While proceedings on a referral under paragraph 19 are in progress in relation to an enquiry—
(a) no closure notice shall be given in relation to the enquiry, and
(b) no application may be made for a direction to give such a notice.
(2) For the purposes of this paragraph proceedings on a referral are in progress where—
(a) notice of referral has been given,
(b) the notice has not been withdrawn, and
(c) the questions referred have not been finally determined.
(3) For the purposes of sub-paragraph (2)(c) a question referred is finally determined when—
(a) it has been determined by the Special Commissioners, and
(b) there is no further possibility of the determination being varied or set aside (disregarding any power to grant permission to appeal out of time).
22 (1) The determination of a question referred to the Special Commissioners under paragraph 19 is binding on the parties to the referral in the same way, and to the same extent, as a decision on a preliminary issue in an appeal.
(2) The determination shall be taken into account by the Inland Revenue—
(a) in reaching their conclusions on the enquiry, and
(b) in formulating any amendments of the return required to give effect to those conclusions.
(3) Any right of appeal under paragraph 35 (appeals against assessments etc) may not be exercised so as to reopen the question determined except to the extent (if any) that it could be reopened if it had been determined as a preliminary issue in that appeal.
23 (1) An enquiry under paragraph 12 is completed when the Inland Revenue by notice (a “closure notice”) inform the purchaser that they have completed their enquiries and state their conclusions.
(2) A closure notice must either—
(a) state that in the opinion of the Inland Revenue no amendment of the return is required, or
(b) make the amendments of the return required to give effect to their conclusions.
(3) A closure notice takes effect when it is issued.
24 (1) The purchaser may apply to the General or Special Commissioners for a direction that the Inland Revenue give a closure notice within a specified period.
(2) Any such application shall be heard and determined in the same way as an appeal.
(3) The Commissioners hearing the application shall give a direction unless they are satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.
25 (1) If in the case of a chargeable transaction no land transaction return is delivered by the filing date, the Inland Revenue may make a determination (a “Revenue determination”) to the best of their information and belief of the amount of tax chargeable in respect of the transaction.
(2) Notice of the determination must be served on the purchaser, stating the date on which it is issued.
(3) No Revenue determination may be made more than six years after the effective date of the transaction.
26 (1) A Revenue determination has effect for enforcement purposes as if were a self-assessment by the purchaser.
(2) In sub-paragraph (1) “for enforcement purposes” means for the purposes of the following provisions of this Part of this Act—
(a) the provisions of this Schedule providing for tax-related penalties;
(b) section 87 (interest on unpaid tax);
(c) section 91 and Schedule 12 (collection and recovery of unpaid tax etc).
(3) Nothing in this paragraph affects any liability of the purchaser to a penalty for failure to deliver a return.
27 (1) If after a Revenue determination has been made the purchaser delivers a land transaction return in respect of the transaction, the self-assessment included in that return supersedes the determination.
(2) Sub-paragraph (1) does not apply to a return delivered—
(a) more than six years after the day on which the power to make the determination first became exercisable, or
(b) more than twelve months after the date of the determination,
whichever is the later.
(3) Where—
(a) proceedings have been begun for the recovery of any tax charged by a Revenue determination, and
(b) before the proceedings are concluded the determination is superseded by a self-assessment,
the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.
28 (1) If the Inland Revenue discover as regards a chargeable transaction that—
(a) an amount of tax that ought to have been assessed has not been assessed, or
(b) an assessment to tax is or has become insufficient, or
(c) relief has been given that is or has become excessive,
they may make an assessment (a “discovery assessment”) in the amount or further amount that ought in their opinion to be charged in order to make good to the Crown the loss of tax.
(2) The power to make a discovery assessment in respect of a transaction for which the purchaser has delivered a return is subject to the restrictions specified in paragraph 30.
29 (1) If an amount of tax has been repaid to any person that ought not to have been repaid to him, that amount may be assessed and recovered as if it were unpaid tax.
(2) Where the repayment was made with interest, the amount assessed and recovered may include the amount of interest that ought not to have been paid.
(3) The power to make an assessment under this paragraph in respect of a transaction for which the purchaser has delivered a land transaction return is subject to the restrictions specified in paragraph 30.
30 (1) If the purchaser has delivered a land transaction return in respect of the transaction in question, an assessment under paragraph 28 or 29 in respect of the transaction—
(a) may only be made in the two cases specified in sub-paragraphs (2) and (3) below, and
(b) may not be made in the circumstances specified in sub-paragraph (5) below.
(2) The first case is where the situation mentioned in paragraph 28(1) or 29(1) is attributable to fraudulent or negligent conduct on the part of—
(a) the purchaser,
(b) a person acting on behalf of the purchaser, or
(c) a person who was a partner of the purchaser at the relevant time.
(3) The second case is where the Inland Revenue, at the time they—
(a) ceased to be entitled to give a notice of enquiry into the return, or
(b) completed their enquiries into the return,
could not have been reasonably expected, on the basis of the information made available to them before that time, to be aware of the situation mentioned in paragraph 28(1) or 29(1).
(4) For this purpose information is regarded as made available to the Inland Revenue if—
(a) it is contained in a land transaction return made by the purchaser,
(b) it is contained in any documents produced or information provided to the Inland Revenue for the purposes of an enquiry into any such return, or
(c) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 28(1) or 29(1)—
(i) could reasonably be expected to be inferred by the Inland Revenue from information falling within paragraphs (a) or (b) above, or
(ii) are notified in writing to the Inland Revenue by the purchaser or a person acting on his behalf.
(5) No assessment may be made if—
(a) the situation mentioned in paragraph 28(1) or 29(1) is attributable to a mistake in the return as to the basis on which the tax liability ought to have been computed, and
(b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time it was made.
31 (1) The general rule is that no assessment may be made more than six years after the effective date of the transaction to which it relates.
(2) In a case involving fraud or negligence on the part of—
(a) the purchaser, or
(b) a person acting on behalf of the purchaser, or
(c) a person who was a partner of the purchaser at the relevant time,
an assessment may be made up to 21 years after the effective date of the transaction to which it relates.
(3) An assessment under paragraph 29 (assessment to recover excessive repayment of tax) is not out of time—
(a) in a case where notice of enquiry is given into the land transaction return delivered by the person concerned, if it is made before the enquiry is completed;
(b) in any case, if it is made within one year after the repayment in question was made.
(4) Where the purchaser has died—
(a) any assessment on the personal representatives of the deceased must be made within three years after his death, and
(b) an assessment shall not be made by virtue of sub-paragraph (2) in respect of a transaction of which the effective date was more than six years before the death.
(5) Any objection to the making of an assessment on the ground that the time limit for making it has expired can only be made on an appeal against the assessment.
32 (1) Notice of an assessment must be served on the purchaser.
(2) The notice must state—
(a) the tax due,
(b) the date on which the notice is issued, and
(c) the time within which any appeal against the assessment must be made.
(3) After notice of the assessment has been served on the purchaser, the assessment may not be altered except in accordance with the express provisions of this Part of this Act.
(4) Where an officer of the Board has decided to make an assessment to tax, and has taken all other decisions needed for arriving at the amount of the assessment, he may entrust to some other officer of the Board responsibility for completing the assessing procedure, whether by means involving the use of a computer or otherwise, including responsibility for serving notice of the assessment.
Finance Act 2003