Schedule 36 information notice penalties for SDLT compliance checks (2026)

When HMRC opens a Stamp Duty Land Tax (SDLT) compliance check, the first letter on the doormat is rarely a tax bill. It is normally an information notice issued under Schedule 36 of the Finance Act 2008 — a formal demand for documents, accounts, valuations or correspondence that the officer believes are needed to check the return.

Ignoring the notice, missing the response deadline, or sending an incomplete reply triggers a three-tier penalty regime laid out in Schedule 36 itself. This piece walks through the statutory structure, the appeal carve-outs, and a worked SDLT example.

Of the 848,775 residential transactions registered with HM Land Registry in 2025 (Land Registry Price Paid, queried 26 May 2026), 765,224 — roughly 90% — were priced above the £125,000 SDLT nil-rate threshold and therefore inside the population that HMRC can in principle compliance-check under Schedule 10 of the Finance Act 2003. The Schedule 36 information-notice power applies to every one of those returns.

What a Schedule 36 information notice actually is

Schedule 36 FA 2008 gives an HMRC officer the power to issue a written notice requiring a taxpayer (a "taxpayer notice", paragraph 1) or a third party (a "third-party notice", paragraph 2) to produce documents or provide information that is "reasonably required" to check the person's tax position.

For SDLT, the most common triggers are:

• The taxpayer's solicitor or accountant has filed an SDLT return that HMRC wants to enquire into within the nine-month enquiry window under FA 2003 Schedule 10. See the SDLT enquiry window guide for the wider procedural timeline.
• A multiple-dwellings, mixed-use, residency or chattels argument was claimed on the return and the officer wants to see the supporting evidence.
• A higher-rate (additional-property) or non-resident surcharge refund has been claimed and HMRC wants to test the underlying day-counting or sale-of-previous-home evidence (see the SDLT amendment and higher-rate refund process for how those refunds work).

A Schedule 36 notice must be in writing, must specify the documents or information required, and must set a deadline that is "reasonable" — in practice usually 30 days. CC/FS2, the HMRC compliance-check factsheet on information notices, is normally enclosed with the notice.

The three-tier penalty structure

If the notice deadline passes without a complete response, Schedule 36 escalates penalties through three statutory tiers.

The two daily-penalty tiers are the cliff edge. Paragraph 40 daily penalties begin the day after the initial £300 falls due and run for as long as the failure continues, capped at £60 per day. Where HMRC has obtained tribunal approval of the notice in advance under paragraph 3, the daily ceiling rises to £1,000 per day under paragraph 49A on a separate application to the First-tier Tribunal once the £60/day cap has proved insufficient.

Paragraph 50 deals with the separate offence of concealing, destroying or otherwise disposing of a document covered by a notice. A summary criminal route to the magistrates' court (paragraph 53) is also available for the most serious cases but is rarely used in routine SDLT enquiries.

Reasonable excuse and the response window

Paragraph 45 of Schedule 36 carves out a defence against all of the above penalties: the penalty does not arise if the taxpayer "had a reasonable excuse for the failure" and the failure was remedied without unreasonable delay once the excuse ended.

What counts as a reasonable excuse is fact-specific. HMRC's published Compliance Handbook (CH26000) treats serious illness, bereavement, or an event genuinely beyond the taxpayer's control as candidate excuses, but explicitly excludes shortage of funds, ignorance of the law, and reliance on an adviser as automatic excuses. The Tribunal has interpreted paragraph 45 strictly in the property context — a busy professional life is not, on its own, a reasonable excuse for missing a deadline.

The standard response window on a paragraph 1 taxpayer notice is 30 days from the date of issue, although the officer can agree an extension in writing before the original deadline expires.

Appeal routes (and the trap with tribunal-approved notices)

The appeal mechanics differ depending on whether the notice was tribunal-approved when it was issued.

Non-tribunal-approved notice — paragraph 29 appeal. The taxpayer has a full right of appeal against the notice itself within 30 days of issue, on the grounds that (a) the notice should not have been given, or (b) the requirement is unreasonable, or (c) the document is not in the taxpayer's possession or power. Penalty appeals are then under paragraph 47.

Tribunal-approved notice — paragraph 49 appeal. Where HMRC obtained First-tier Tribunal approval for the notice in advance under paragraph 3, the notice itself cannot be appealed (because the tribunal already considered the same arguments at the approval stage). Penalty appeals are still allowed under paragraph 47 on the limited ground that there was a reasonable excuse or that the penalty was incorrectly calculated.

Practitioners read the heading of every Schedule 36 notice carefully for exactly this reason: a "tribunal-approved" notice closes off the wider appeal route and leaves only the reasonable-excuse argument.

A worked SDLT example

Suppose a buyer completed in late 2025 on a £425,000 property in Manchester (postcode M1 1AE). The standard SDLT bill on that purchase is £11,250 according to the stamp duty calculator (Land Registry / HMRC bands, fetched 26 May 2026), made up of £2,500 on the 2% slab and £8,750 on the 5% slab.

HMRC opens an enquiry under FA 2003 Schedule 10 in February 2026 and issues a paragraph 1 Schedule 36 information notice requesting:

• The fully-executed contract of sale and any side letters.
• Invoices and bank statements showing how the £425,000 consideration was paid.
• Any chattels apportionment relied on (e.g. a separate £15,000 invoice for fitted carpets, curtains and fixtures that the buyer treated as outside the chargeable consideration).

If the buyer ignores the notice and the 30-day deadline expires:

Within roughly three months the Schedule 36 penalty stack can rival the underlying £11,250 SDLT in dispute, before any inaccuracy penalty under Schedule 24 FA 2007 is added on top. At the £750,000 level (standard SDLT of £27,500 per the SDLT calculator) the relative weight reverses, but the absolute cost of ignoring a notice is no less serious.

How this fits into the wider compliance-check process

A Schedule 36 information notice sits inside the broader nine-month enquiry window for SDLT returns (FA 2003 Sch 10 para 12) and inside the four/six/twenty-year discovery-assessment window for cases of carelessness or deliberate behaviour (FA 2003 Sch 10 para 30). Sibling procedural pieces cover those flanking topics:

• SDLT enquiry windows and HMRC challenge letters — the wider procedural map.
• SDLT refund failed cases — what HMRC actually rejects when refund claims do not stand up.
• SDLT vs LBTT vs LTT comparison — the cross-regime view for buyers comparing England, Scotland and Wales.
• More procedural reference pieces in the Cost Intelligence category.

The headline numbers

• £300 — fixed initial penalty under paragraph 39 the day after the notice deadline expires.
• £60 per day — paragraph 40 daily penalty cap thereafter, set by HMRC.
• £1,000 per day — paragraph 49A tribunal-approved daily cap once HMRC obtains a separate First-tier Tribunal direction.
• £3,000 — paragraph 40A cap on inaccuracy penalties for information given in response to a notice.
• 30 days — standard response window on a paragraph 1 notice (unless an extension is agreed in writing before the deadline).
• 30 days — appeal window on a non-tribunal-approved paragraph 1 notice under paragraph 29.

This is general procedural information drawn from published HMRC manuals and Schedule 36 of the Finance Act 2008. It is not legal or tax advice. Anyone in receipt of a Schedule 36 notice should speak to a qualified solicitor or chartered tax adviser before acting.