In the event of a legal completion, no one knows whether another planning application will be submitted or, if there is one, what the outcome will be. The overpayment payment is both conditional, because no one knows for sure if it is being paid; and uncertain, because no one knows how many more houses might be involved. The developer seeks (and obtains) HMRC`s permission to defer payment from SDLT to the over-age item of the price, but must pay SDLT for the $700,000 paid after completion. SDLT on this cannot be deferred. Finally, what if, in our example, no one asks for permission to build more than 14 houses? At the end of the 10 years, the responsibility of the over-ageing user ends. But from SDLT`s point of view, this is not the end. The developer must continue to submit another SDLT return (by letter) that tells HMRC that the end result was such that no other LTDS was due. The penalty for non-return of the SDLT also applies to the absence of „zero“ restitution when no tax is due. How over-ageing agreements can increase your country`s profits These payments can require a lot of negotiation and can take time and complexity. The cost of compiling the overage agreement can be costly, and there are a number of potential mine falls, so it can help memorize the following: What can cause a problem is the division of the land into sections.
Instead of making individual payments, as portions of the land are purchased, which will result in staggered payments, it may be better to keep it simple and free the entire land from overruns as quickly as possible. Thus, a developer will be able to predict the cost of development sooner rather than later. The parties may agree that the developer (or the bank that provided the financing) can surrender the land without overcharning as long as the buyer enters into a new overrun agreement on the same terms. Here too, development is essential and legal advice is essential. Among the most important issues that need to be addressed in an overage agreement: don`t forget the effects of SDLT (Stamp Duty). In addition to the immediate purchase price of the land, you could pay more for the country in the future. Before completing the purchase, you must make a „fair assessment“ of the likely amount that will be paid in the future and include that figure in the return you make at HM Revenue and Customs. Stamp duty will be paid on the actual purchase price and the estimated amount of the overrun.
If the „fair assessment“ cannot be made and the stamp duty quota is or cannot be determined, you can request the deferral of the additional stamp duty payment, but this request must be made within 30 days of the closing date. If you end up paying more than you estimated for the country, another calculation and payment of stamp duty must be made.