CHANGES IN STAMP DUTY ADMINISTRATION
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CHANGES IN STAMP DUTY ADMINISTRATION Recent Finance Acts have introduced far-reaching changes in the operation of the stamp duty system. In this presentation I propose to focus principally on the changes introduced by Finance Act 2012. Before I do so it is necessary to go back a bit further in order to place the most recent changes in context. Prior to 30 December 2009 instruments were stamped by means of an impression of a stamp (which took the form of a foil hologram) on the instrument itself and this process was carried out at the stamps branch office of the Revenue Commissioners. From 30 December 2009 the stamping system was changed so that a return was filed in respect of each stampable instrument. Initially stamp duty returns could be filed online by means of the Revenue Online System (ROS) or by means of a paper return. With effect from 1 June 2011 it became mandatory to file stamp duty returns online and to submit payments via ROS (Revenue On-Line Service) (with payments by EFT by concession, for certain practitioners). One practical effect of the change from a system of presenting the instrument for stamping to presenting a return was that the Revenue Commissioners were no longer seeing the instruments; except in adjudication, expression of doubt (EOD) and penalty mitigation cases and the relatively infrequent post stamping audit interventions. Nonetheless the experience of the Revenue Commissioners was that somewhere between 35% to 40% of stamp duty returns were ending up as adjudication or EOD cases. Whilst the Revenue were very satisfied with the level of practitioner adoption of the e-stamping system, the fact that a high level of resources continued to be involved in dealing with adjudication and EOD cases caused Revenue to carry out a further review into how the stamping system operated, which resulted in the changes that have recently come into operation.
The Finance Act 2012 contained a number of changes in legislation relating to the administration of stamp duty that I will address. These changes were commenced by S.I. 228 of 2012 with effect for all instruments executed on or after 7 July 2012. Instruments executed prior to 7 July 2012 will continue to be dealt with under the old system and the e-stamping system will automatically direct returns into the relevant system. Self Assessment Stamp duty legislation prior to the Finance Act 2012 did impose certain disclosure requirements which had to be satisfied when completing a stamp duty return, the breach of which carried certain sanctions, but the return was not technically the taxpayer’s own assessment of the duty payable. For all instruments executed on or after 7 July 2012, the stamp duty return is deemed to include an assessment by the taxpayer of the amount of stamp duty that ought to be paid on the instrument (Section 20(1) SDCA). When filing a return for an instrument executed on/after 7 July 2012 the summary and calculation page now reads “Self Assessed Return – Summary and Calculation”. The Revenue Commissioners retain the right to issue a substitute assessment (Section 20(3) SDCA). The change to self assessment also necessitated a number of other technical changes in the operation of the stamp duty system which I will now address. Failure to File a Stamp Duty Return Finance Act 2012 introduces a new fixed penalty of €3,000 on an accountable person (or each accountable person if there is more than one) for failure to file a stamp duty return (Section 8B SDCA). This penalty applies to instruments executed on/after 7 July 2012. There is no de minimus threshold on the application of this penalty, which could theoretically apply even where the amount of stamp duty payable on the un-filed return would have been negligible. However, I understand that it is not intended to apply this penalty automatically in every case of late filed returns, but no guidance has been published so far to indicate in what circumstances the Revenue Commissioners would levy this penalty. The Finance Act 2012 also extends the categories of tax-geared penalties to cover failure to file a stamp duty return which I will address later.
Incorrect Returns
Where a taxpayer deliberately or carelessly causes an incorrect stamp duty return to be
filed, he or she is deemed to have failed to file a stamp duty return, unless the error in
the return is remedied by the delivery of a correct stamp duty return before the expiry of
the 30 day filing date (Section 14A(2)(a) SDCA). Where an incorrect stamp duty return is
filed, but neither deliberately or carelessly, and it comes to the taxpayer’s notice, the
person shall be deemed to have failed to file the return within the 30 day filing deadline if
a correct return is not filed without unreasonable delay (Section 14A(2)(b) SDCA).
In addition, where the Revenue Commissioners are dissatisfied with any information
contained in a stamp duty return, they can require the taxpayer to deliver a statement or
evidence within specified time periods and, if the taxpayer fails to do so, the stamp duty
return is deemed not to have been filed within the 30 day deadline (Section 14A(2)(c)
SDCA).
Late Filing of Stamp Duty Returns
Finance Act 2012 leaves the specified return date for the filing of stamp duty returns (i.e.
30 days after first execution) and the rate of late filing interest unchanged. The Revenue
Commissioners have confirmed that they will continue to accept returns filed up to 44
days after first execution in line with previous practice.
For instruments executed on/after 7 July 2012 a new late filing surcharge applies equal
to:
(a) 5% of the unpaid duty where the stamp duty return is filed within two months
after the specified return date subject to a maximum of €12,695; or
(b) 10% of the unpaid duty where the return is filed later than two months after the
specified return date subject to a maximum of €63,485.
A number of features of the new filing surcharge should be noted. It applies to returns
filed after the specified return date whether or not the stamp duty is paid at the time of
filing. In addition as it is a surcharge (and not a penalty) it forms part of the stamp duty
charge and late filing interest will be charged on the amount of the original stamp duty
liability plus the surcharge amount.For instruments executed prior to 7 July 2012 the penalty surcharge provisions of Section 14(2) SDCA will apply. The table set out below (which has been reproduced from guidance notes issued by the Revenue Commissioners) illustrates the main differences between the new surcharge and interest regime which applies to instruments executed on / after 7 July 2012 and the previous penalty and interest regime which applies to instruments executed prior to 7 July 2012. Table 1: Penalties & Interest regime for instruments executed before 7th July 2012 Scenario Penalty Daily Interest Return filed and stamp duty paid NIL NIL in full within 44 days of the date of execution Return filed after 44 days 10% 0.0219% on any unpaid and/or stamp duty unpaid but balance from the date of filed/paid within six months of execution the date of execution Return filed and/or stamp duty 20% 0.0219% on any unpaid remains unpaid later than six balance from the date of months but within 12 months of execution the date of execution Return filed and/or stamp duly 30% 0.0219% on any unpaid remains unpaid after12 months balance from the date of of the date of execution execution Table 2: New Duty Surcharge & Interest regime for instruments executed on or after 7th July 2012 Scenario Duty Surcharge Daily Interest Return filed and stamp duty paid NIL NIL in full within 44 days of the date of execution
Return filed within 44 days of NIL 0.0219% on the total of
the date of execution but stamp any unpaid balance
duty remains unpaid after 44
days
Return filed after 44 days and/or 5% 0.0219% on the total of
stamp duty remains unpaid but any unpaid balance +
Note: The
filed/paid within 92 days of the surcharge, from the date of
maximum
date of execution execution
surcharge here
is capped at
€12,695
Return remains unfiled and 10% 0.0219% on the total of
unpaid after 92 days of the date any unpaid balance +
Note: The
of execution surcharge, from the date of
maximum
execution
surcharge here
is capped at
€63,485
It should be noted that Table 2 above only includes details of interest and surcharges
and does not include the fixed penalty or tax geared penalties which can apply to
instruments executed on/after 7 July 2012.
Overall, the changes in the levels and capping of the surcharges is to be welcomed.
Surcharges for Under-valuations and Incorrect Valuations
Finance Act 2012 abolishes the penalty surcharges for under-valuations in voluntary
dispositions (previously contained in Section 15 SDCA) and incorrect apportionment of
purchase price (previously contained in Section 16 SDCA) in respect of instruments
executed on/after 7 July 2012. It appears to be intended that undervaluation issues will
be addressed under the provisions dealing with non-disclosure in Section 8(2) SDCA,
which are the subject of tax-geared penalties that I will deal with later.
For instruments executed prior to 7 July 2012 the penalty surcharges in Section 15 and
16 SDCA will continue to apply.Tax-Geared Penalties
Finance (No. 2) Act 2008 introduced a new system of penalties on accountable persons
for failure to comply with the disclosure requirements in Section 8 SDCA. Under this
regime, where the non-disclosure was deliberate or careless, there is a fixed penalty of
€1,265 plus a further tax-geared penalty. The amount of the tax-geared penalty depends
on a number of factors:
(a) whether the non-disclosure was deliberate, or careless but not deliberate;
(b) whether the accountable person cooperates with the Revenue Commissioners;
and
(c) whether a prompted or unprompted qualifying disclosure is made to the Revenue
Commissioners.
Finance Act 2012 inserted a new Section 8(5) SDCA which creates a rebuttable
presumption of deliberate behaviour where an instrument operates or is deemed to
operate as a voluntary disposition pursuant to Section 30 or Section 54 SDCA and such
fact is not brought to the attention of the Revenue Commissioners in the stamp duty
return. I set out below a table summarising the operation of the tax geared penalties for
non disclosure and the levels of mitigation allowed.
Table 3 - Tax-Geared Penalties — Failure to Disclose
Category of Base Penalty Prompted Unprompted
default penalty where qualifying qualifying
where no taxpayer disclosure disclosure
co- fully co-
operation operates
(and no
other
factors
apply)
First Deliberate 100% of 75% of 50% of 10% of
default underpaid underpaid underpaid underpaid dutyduty duty duty
Careless but 40% of 30% of 20% of 5% of underpaid
not deliberate underpaid underpaid underpaid duty
(where base duty duty duty
penalty
exceeds 15%
of duty
payable)
Careless but 20% of 15% of 10% of 3% of underpaid
not deliberate underpaid underpaid underpaid duty
(where base duty duty duty
penalty does
not exceed
15% of duty
payable)
Second Deliberate 100% of 75% of 75% of 55% of
default underpaid underpaid underpaid underpaid duty
duty duty duty
Careless but 40% of 40% of 30% of 20% of
not deliberate underpaid underpaid underpaid underpaid duty
(where base duty duty duty
penalty
exceeds 15%
of duty
payable)
Finance Act 2012 expands the category of tax-geared penalties to include failure to file a
stamp duty return. The tax-geared penalties for failure to file a stamp duty return operate
similarly (but not identically) to the tax-geared penalties for non-disclosure. The existing
tax-geared penalties for non-disclosure apply different levels of mitigation for “careless
but not deliberate” behaviour depending on whether the base penalty was above orbelow 15% of the unpaid duty. The new tax-geared penalties for failure to file a stamp
duty return do not contain a similar provision.
Table 4 - Tax-Geared Penalties — Failure to File Stamp Duty Returns
Category of Base Penalty Prompted Unprompted
default penalty* where qualifying qualifying
where no taxpayer disclosure disclosure
co- fully co-
operation operates
(and no
other
factors
apply)
First Deliberate 100% of 75% of 50% of 10% of unpaid
default unpaid unpaid duty unpaid duty duty
duty
Careless but 40% of 30% of 20% of 5% of unpaid
not deliberate unpaid unpaid duty unpaid duty duty
duty
Second Deliberate 100% of 75% of 75% of 55% of unpaid
default unpaid unpaid duty unpaid duty duty
duty
Careless but 40% of 40% of 30% of 20% of unpaid
not deliberate unpaid unpaid duty unpaid duty duty
duty
* Calculated on the amount of stamp duty that would have been paid if the stamp duty
return had been delivered.Abolition of Adjudication Adjudication had been compulsory in order to claim certain reliefs and it could also be requested by the taxpayer. The principal benefit of an instrument which had been adjudicated was that it was considered to be duly stamped for all purposes and no objection could be raised to the adequacy of stamping of adjudicated instruments (albeit that it was open to the Revenue Commissioners to issue a substitute assessment if they considered that their original assessment was incorrect). Aside from this, practitioners drew comfort from the fact that the interaction with the Revenue made it less likely that the transaction would be re-opened and therefore adjudicated transactions carried with them a fair degree of certainty. Although the Revenue Commissioners no longer retain the power to adjudicate documents, they have the power to require the taxpayer to produce the instrument together with such other evidence as they deem necessary in order to establish that the instrument has been properly stamped (Section 20(4) SDCA). I will discuss the other powers that the Finance Act 2012 vests in the Revenue Commissioners to inspect and require production of documentation, later in this paper. Admissibility in Evidence Under Section 127 SDCA an instrument that is not duly stamped is not (subject to limited exceptions) admissible in evidence in court or arbitral proceedings. As noted above, instruments that had been adjudicated were considered to be duly stamped but, prior to Finance Act 2012, this did not extend to instruments that had been stamped via the e- stamping system but not adjudicated. Section 127 SDCA has been amended by Finance Act 2012 so that ALL instruments executed on/after 7 July 2012 and stamped using the e-stamping system are considered to be duly stamped (Section 127(5) SDCA). This change will be of considerable benefit to many professionals who may otherwise have had to satisfy themselves as to the sufficiency of stamping of instruments, and which in certain cases may have required due diligence checks. One practical result of these changes is that (with the exception of expression of doubt cases) where a stamp duty return is filed in respect of an instrument executed on/after 7th July 2012 and the stamp duty (and any late filing interest if applicable) is paid, the filer will receive the stamp certificate immediately into their ROS inbox.
Expression of Doubt (EOD) The Finance Act 2012 narrows the application of the EOD facility. Prior to Finance Act 2012 a valid EOD operated to protect the taxpayer against certain penalties associated with inadequate disclosure. However, for all instruments executed on/after 7 July 2012, a valid EOD will only operate to remove any liability to the late filing interest that could arise on any additional stamp duty payable, when the subject matter of the EOD is determined (Section 8C(3) SDCA). A valid EOD will also mean that the stamp duty return will not be treated as an “incorrect return”. EOD cases are defined as cases where the accountable person is in doubt about the correct application of any enactment relating to stamp duty to an instrument that could give rise to a liability to stamp duty for that person or could affect that person’s liability to stamp duty or his entitlement to an exemption or a relief from stamp duty (Section 8C(2)(a) SDCA). This formulation of expression of doubt is considerably narrower than the pre Finance Act 2012 formulation which allowed an EOD where a person was in doubt as to the application of the law to, or the treatment for tax purposes of, a matter to be contained in an instrument, or in a statement to be submitted under Section 8(2) SDCA. Where a taxpayer wishes to submit an EOD, this is done by selecting the Expression of Doubt tick box on the e-stamping return and filing the stamp duty return together with the amount of stamp duty that the taxpayer believes to be correct. The stamp certificate will not be issued until the EOD process has concluded. The content of the EOD is then submitted by means of a separate communication and must be delivered to the Revenue Commissioners within 30 days after the date on which the instrument is first executed (section 8C(2)(b)(ii) SDCA). The Revenue Commissioners in their published guidance have indicated that the EOD facility will only be available for returns filed within 44 days after the date on which the instrument is first executed. An EOD has to meet certain additional criteria in order to be valid. It must:
(a) set out full details of the facts and circumstances affecting the liability of an
instrument to stamp duty and make reference to the provisions of the law
giving rise to the doubt;
(b) identify the amount of stamp duty in doubt;
(c) be clearly identified as an expression of doubt; and
(d) be accompanied by supporting documentation where relevant.
Section 8C(1) SDCA
Where the Revenue Commissioners accept that the taxpayer’s interpretation of the
doubt is correct, they will approve the stamp duty return as filed and issue the stamp
certificate to the filer’s ROS inbox. Where the Revenue Commissioners do not agree
with the taxpayer’s interpretation of the doubt they will notify the filer that the
interpretation is incorrect. Once the filer receives such notification, the taxpayer will have
30 days within which to file an amended return and pay any additional duty without
incurring late filing interest thereon. If the amended return and/or the additional duty
payment is received late, then late filing interest will be charged on the balance unpaid,
back to the date of first execution.
The Revenue Commissioners may reject an EOD as not being genuine. Section 8C(4)
SDCA contains a non-exhaustive list of situations that will not be accepted by the
Revenue Commissioners as genuine expression of doubt cases. These include where
the Revenue Commissioners:
(a) have issued general guidelines concerning the application of the law in
similar circumstances;
(b) are of the opinion that the matter is sufficiently free from doubt so as not to
warrant an expression of doubt; or
(c) are of the opinion that the accountable person was acting with a view to the
evasion or avoidance of tax.
Where the Revenue Commissioners do not accept an EOD as genuine they will notify
the accountable person (Section 8C(5) SDCA) and according to guidance published by
the Revenue Commissioners they will issue a notice of rejection setting out their
reasons. The filer must on receipt of the notification file an amended return and payany additional duty and late filing interest thereon. On payment of the full liability the Revenue Commissioners will release the stamp certificate. An accountable person who is aggrieved by a decision of the Revenue Commissioners not to accept an EOD as genuine can, within 30 days of the notification of such decision, bring an appeal to the Appeal Commissioners on the net point of whether the EOD is genuine (Section 8C(6) SDCA). If the outcome of the appeal is in favour of the taxpayer then the Revenue Commissioners will be obliged to treat the EOD as genuine. If the outcome of the appeal upholds the Revenue Commissioners’ position then the EOD stays rejected and the taxpayer continues to be liable for interest on the outstanding duty balance. The taxpayer will have to file an amended return and pay any outstanding liability (including interest) in order to have the stamp certificate released. Appeals Finance Act 2012 replaces the provisions of Section 21 SDCA relating to appeals to the Appeals Commissioners. Generally the pre-existing provisions relating to the bringing and conduct of appeals are unchanged. However, it is provided that no appeal can be made against an assessment raised by the Revenue Commissioners where the duty had been agreed between the Revenue Commissioners and an accountable person (or his or her agent) before the raising of the assessment. The new provisions also prevent the bringing of an appeal where a stamp duty return has not been filed, or where a stamp duty return has been filed but the Revenue Commissioners are not satisfied with the return so delivered, or the Revenue Commissioners have received information as to the insufficiency of the stamp duty return so delivered (Section 21(4)(a)(i)-(ii) SDCA). In a notice of appeal an accountable person must specify (a) each amount on matter in the assessment with which the accountable person is aggrieved and (b) the grounds in detail of the accountable person’s appeal as respects each such amount or matter (Section 21(5) SDCA). If a notice of appeal fails to meet these requirements, to the extent that it is so deficient, it shall be deemed not to have been brought (Section 21(6) SDCA).
Retention of Records
Section 128A SDCA (introduced by Finance Act 2012) imposes a duty on an
accountable person to retain, or cause to be retained, certain records for a period of six
years from the later of (a) the date on which a stamp duty return is delivered to the
Revenue Commissioners, or (b) the date on which stamp duty was paid.
Records are defined as “includes books, accounts, documents and any other data
maintained manually or by any electronic, photographic or other process, relating to:
(a) a liability to stamp duty, and
(b) a relief or any exemption claimed under any provision of [the Stamp Duties
Consolidation Act, 1999]” (Section 128A(1) SDCA).
An accountable person is required to retain or, to cause to be retained on his or her
behalf, records (as defined) as are required to enable:
(a) a true return or statement to be made for the purposes of the Stamp Duties
Consolidation Act 1999;
(b) a claim to a relief or an exemption under any provision of the Stamp Duties
Consolidation Act 1999 to be substantiated
Section 128A(2) SDCA
Any person who fails to comply with these requirements is liable to a fixed penalty of
€3,000 (Section 128A(6) SDCA).
Powers of Inspection
Section 128B SDCA (introduced by Finance Act 2012) gives the Revenue
Commissioners new powers to require the production of records and to inspect records
held by or on behalf of an accountable person, which are backed up with significant
penalties for non compliance.
These new powers give authorised officers of the Revenue Commissioners power to
require the production of books, records and documents, the furnishing of informationand explanations, and the giving of assistance by a relevant person and an employee of a relevant person. These new powers also allow an authorised officer of the Revenue Commissioners to enter any premises or place of business of a relevant person for the purpose of auditing a stamp duty return (Section 128B(3) SDCA). A relevant person is defined as an accountable person and any person who holds records on behalf of an accountable person (Section 128B(1) SDCA). An employee of an accountable person is defined as an employee who by virtue of his or her employment is in a position to, or to procure: (a) the production of the books, records or other documents; (b) the furnishing of information, explanations and particulars; and (c) the giving of all assistance to an authorised officer, as may be required pursuant to section 128B(3) SDCA. Section 128B(1) SDCA If a relevant person fails to comply with the requirements of an authorised officer of the Revenue Commissioners, he or she is liable to a penalty of €19,045 and, where the failure continues, a further penalty of €2,535 for each day on which the failure continues. An employee of a relevant person who fails to comply with the requirements of an authorised officer of the Revenue Commissioners is liable to a penalty of €1,265. These new statutory provisions do not contain any defence based on legal privilege. Implications for Practitioners There are some positive changes. The reduction and capping of surcharge liability for late filing of stamp duty returns is welcomed. Another positive development is the fact that documents stamped via the e-stamping system will now be considered as being duly stamped for all purposes, thereby relieving practitioners and registrars of the task of having to investigate whether a particular document has been adequately or properly stamped. This change (which had been lobbied for) goes some way towards making the stamp duty liability a personal liability of the accountable person rather than operating as a disability attaching to the document.
Other positive changes include an improvement of the “Contact Locator” function on the revenue.ie website which now shows the tax type associated with a tax reference number. This is a useful means of establishing the associated tax type of a tax reference number where it has not been provided to the filer as it is necessary to input both the tax reference number and associated tax type when completing a stamp duty return. Another positive change is the expansion of the menu of exemptions and reliefs in the online stamp duty form which goes some way to addressing some shortcomings in the e-stamping system though there are still a number of transaction types which are not properly catered for and in respect of which the Revenue Commissioners have come up with cumbersome work arounds. One practical difficulty will arise from the fact that the old system will apply to documents executed prior to 7 July 2012 and practitioners will have to be careful to apply the relevant principles when reviewing documents. For example, if a solicitor is reviewing title documents which include deeds executed before 7 July 2012, she or he will have to satisfy himself that such deeds are properly stamped (as the stamp certificate is not definitive as to the adequacy of stamp for documents executed pre 7 July 2012). Practitioners are also going to have to become familiar with the changes to the system of penalties and surcharges. Obviously over a relatively short period the penalties and surcharges for instruments executed prior to 7 July 2012 should become less relevant. However the fact that mitigation of late filing interest and surcharges will no longer be possible under the new regime will come as a surprise to many practitioners. Practitioners will also have to become accustomed to the fact that stamp duty reliefs will no longer involve an adjudication procedure. As noted above, for many practitioners the fact that a relief had been the subject of an adjudication process gave them a level of comfort that the transaction was unlikely to be re-opened by the Revenue Commissioners (even though as a technical matter it remains open to the Revenue Commissioners to issue a substitute assessment of an adjudicated transaction). It is likely that some practitioners will feel less sure of their position in advising on transactions involving a stamp duty liability because of the abolition of the adjudication process. I propose to examine the key areas where practitioners will need to examine their processes.
As noted above, the accountable person is now subject to an obligation to retain records for six years and is liable to a fixed penalty of €3,000 for failure to comply. Given the nature of many transactions which give rise to a stamp duty liability, the practical reality is that the accountable person will expect his professional adviser to have retained all relevant documentation. Beyond setting out the obligation to maintain appropriate records of any transaction which gives rise to a stamp duty liability, or in which a relief or exemption was availed of, there is currently no detailed guidance as to what records should be retained. I personally think that it is unlikely that the Revenue Commissioners will issue any detailed guidance on this topic, though hopefully practitioners’ professional bodies will publish some guidance in due course. Practitioners who take responsibility for preparing and filing a stamp duty return should as a starting point recognise that what they are doing is preparing and filing a tax return in respect of a transaction on behalf of their client. Practitioners should take care to ensure that the information they input is derived either from the document(s) in respect of which the stamp duty return is being filed, or is otherwise suitably verified, and an appropriate record of same is held on the practitioner’s file. It should be noted that when preparing a stamp duty return using the ROS system, the person preparing the return makes various selections at different stages which determines how the stamp duty liability is calculated. The configuration of the online stamp duty return does not permit the filer to print off a full record of information inputted into a stamp duty return. Whilst there is a facility to print off the summary calculation sheet, this does not contain any record of the elections made in the course of inputting the relevant information in the stamp duty return. Therefore at best the stamp duty calculation sheet is only a partial record. It is likely that the necessary records will be a combination of a number of things including the practitioner’s file notes recording information provided to the practitioner, letters of advice, the stamp duty return and the document itself. Another point to watch out for is that post Finance Act 2012, as certificates are no longer required in documents in order to claim a relief or an exemption, practitioners are likely to cease including certificates in documents. Such certificates were of at least of some evidential value insofar as one or more of the parties to the document were confirming the contents of the certificate and the practitioner in preparing a stamp duty return could
rely on the certificate as some level of verification. I use the word “some” because certificates were never of themselves definitive assurance as to their subject matter even though some practitioners tended to believe that they were. In any event, given the demise of certificates practitioners will have to consider more carefully what evidence is needed to support a claim for a relief or an exemption. It may seem obvious that a copy of the document in respect of which the stamp duty return has been filed should be retained on file, but frequently practitioners do not do this. It is common practice to find that solicitors acting for purchasers of property after attending to stamping and registration send the original of the purchase deed to the purchaser’s mortgage provider and do not retain a copy. In cases where adjudication would previously have been required, it is advisable for practitioners to assemble and retain on their file the same type of documentation which they would have assembled and provided to the Revenue Commissioners in support of an application for adjudication. The Revenue Commissioners have indicated in the course of their public presentations on the new self assessment regime, that in the event of an audit of a stamp duty return which would previously have been adjudicated, they are likely to require similar information and documentation to that which they would have requested in the conduct of an adjudication. It should be noted that post Finance Act 2012 it remains possible for the Revenue Commissioners to request a statutory declaration to be furnished in any case where such a statutory declaration would have been submitted as part of the adjudication process. It would therefore be advisable in such cases for practitioners to prepare the form of statutory declaration at the time of the transaction (as they would have done pre self assessment) and hold it on their file in case the stamp duty return is selected for audit. It is foreseeable that some practitioners will not do so for various reasons such as a reluctance to ask clients to swear statutory declarations (e.g for associated companies relief under section 79 SDCA) when they take the view that it is not absolutely essential to claim the relief. It is my view that practitioners who take such an approach are ultimately placing a greater burden on themselves as it will inevitably be more difficult to assemble the necessary information and have the relevant declarations sworn months or years after the event. Another aspect of the changes which have been introduced has been the introduction of a statutory definition of an EOD that I addressed earlier. It is open to the Revenue
Commissioners to reject an EOD as not being genuine for a variety of reasons including where the Revenue Commissioners have issued general guidelines on the application of the law in similar circumstances. EODs have to date proven to be a useful means to approach problematic situations though there must have been some level of misuse of the EOD facility to prompt the introduction of the very restrictive limits which have now been imposed on the operation of the EOD facility. In parallel with the introduction of the new self assessment regime, the Revenue Commissioners published detailed guidance on how interest liabilities will be treated in the case of rejected EODs which are appealed to the Appeal Commissioners. It is to be hoped that the Revenue Commissioners will give some latitude on the operation of the EOD regime in practice. There have been indications from the Revenue Commissioners that they will accept EODs in situations where the functionality of the ROS system does not accommodate certain types of transactions even though these would not strictly qualify as EODs. One example of this is the acquisition of a business involving some element of unascertainable consideration. The Revenue Commissioners have indicated in the course of their public presentations on the new self assessment system that they would accept EODs in such cases. The erosion of the certainty that practitioners derived from adjudicated transactions is also likely to result in an increase in the use by practitioners of the Revenue Technical Service (RTS) and /or other pre-transaction communications with the Revenue Commissioners. Perhaps one of the more significant shifts in the administration of the stamp duty system will be seen in how the Revenue Commissioners approach the concept of self assessment, which has now been introduced as a basic tenet of the system. Under the pre-2010 regime when documents were physically presented for stamping the Revenue Commissioners’ staff frequently identified errors and allowed practitioners a grace period to correct them. Under the e-stamping regime, as modified by Finance Act 2012, inaccurate stamp duty returns may be deemed to be incorrect returns and be exposed to late interest and/or tax-geared penalties. I understand that the Revenue Commissioners’ approach to self assessment is likely to be that the accountable person is responsible for ensuring that a stamp duty return is correct or that an EOD submission meets the relevant statutory requirements and the Revenue Commissioners are not permitted to assist in the manner that they may have done previously, as this would be inconsistent with a self assessment basis. I believe that this change in the
administration of stamp duty, more than anything else, is the change that practitioners will find most difficult to adjust to. The change to self assessment and the removal of adjudication will result in the Revenue Commissioner’s resources being freed up, once the backlog of adjudication submissions relating to documents executed prior to 7 July 2012 is cleared. The Revenue Commissioners will be conducting audits of stamp duty returns submitted under the self assessment regime, though it is not yet clear what approach such audits will take. In the course of their presentation on the self assessment regime, the Revenue Commissioners indicated that the level of stamp duty audits will ultimately be similar to the level of audits under other self assessed tax heads and they also indicated that in many cases they will be looking for similar information as they would hereto have sought in adjudication cases. Amendments to the Code of Practice for Revenue Auditors are planned in order to bring stamp duty audits within the framework for Revenue audits generally. Practitioners can therefore expect to see stamp duty transactions being the subject of audits in the not too distant future. Practitioners can expect that the Revenue Commissioners will utilise the new fixed penalties and tax geared penalties in respect of issues arising from such audits. Conclusion The changes introduced by recent Finance Acts and the shift to a full self assessment model will place greater responsibility on advisers who provide stamp duty advisory and compliance services. The removal of adjudication and the narrowing of the expression of doubt facility will mean that practitioners will be less sure about the status of transactions they are involved in. The number of audit interventions will increase over time and will be carried out pursuant to the Code of Practice for Revenue Auditors backed up by fixed penalties and tax geared penalties which practitioners would not have had to deal with previously in stamp duty transactions.
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