What if the cost is unascertainable?
Duty was abolished on lease instruments first executed on or after 1 January 2008. The abolition of duty on leases does not affect any obligation to pay duty in respect of a lease instrument and a variation of a lease instrument executed before 1 January 2008.
Where some or all of the costs components of a lease cannot be determined upfront, duty may be determined by:
Applying the current CPI figure against a base cost, compounded over the full term of the lease. In this case, duty will be payable within three months of the date of first execution of the lease.
If any lease first executed before 1 January 2008 has any unascertainable cost components for which there is an estimate date on or after 1 January 2008, a final estimate of the cost of the lease will be made on the first such date on or after 1 January 2008. The lease instrument will be chargeable with duty as if that final estimate were the full cost of the lease, and no further estimates of the cost of the lease will be made.
Questions and Answers
- How will the OSR deal with a lease instrument that was executed before 1 January 2008 that had an unascertainable cost component for which there is an estimate date on or after 1 January 2008?
The lease is still liable to duty for its entire term. The first of those estimate dates to occur on or after 1 January 2008 will be taken as the final estimate date. The lessee must provide a satisfactory estimate of the total cost of the lease and duty will be payable as if that final estimate were the full cost of the lease.
- If a final estimate date after 1 January 2008 has been set, can that date be brought forward?
If a lessee can provide a satisfactory estimate of the total cost of the lease before the next reappraisal date, the lease instrument can be stamped on a final basis using that estimate, and it will be treated as though it was the final estimate of the total cost of the lease
If the amount of cost component actually paid (after the final estimate date) is higher than the estimated amount on which duty has been paid, will additional duty be payable?No, you do not have to pay any more duty if the actual amount is higher than the estimated amount.
- Is there a refund if the amount of cost component actually paid (after the final estimate date) is lower than the estimated amount on which duty has been paid?
No, you do not get a refund if the amount of cost component actually paid is lower that the estimated amount.
