Warning over bogus Stamp Duty claims

Homebuyers are being warned to avoid Stamp Duty Land Tax scams following a landmark Court of Appeal decision.

HMRC is calling on people purchasing properties to be vigilant of tax agents offering to secure Stamp Duty Land Tax (SDLT) repayments on their behalf where repairs are needed to a property they have bought.

Some agents have suggested that, for a fee, they can reclaim SDLT the buyer has already paid by saying that the property is non-residential, because it’s uninhabitable.

However, HMRC warns that making claims of this kind often leave the homeowner liable for the full amount of SDLT, plus penalties and interest.

A recent Court of Appeal judgment has confirmed that housing in need of repair is chargeable at the residential rates of SDLT, and that repayment claims based solely on a property’s condition are not valid.

HMRC says the decision confirms its long-standing view that if a property requires repairs but retains the fundamental characteristics of a dwelling, it is still suitable for use as a dwelling and attracts residential rates of SDLT.

A key factor in determining suitability is whether a property had been previously used as a dwelling.

HMRC now says it is taking decisive action on spurious SDLT repayment claims, using civil and criminal powers to deal with the minority who undermine the tax system.

Anthony Burke, HMRCs deputy director of compliance assets, said: “The Court of Appeal’s decision is a major win, protecting public funds.

“Homebuyers should be cautious of allowing someone to make a Stamp Duty Land Tax repayment claim on their behalf. If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.”

Anyone who is unsure of the rules should check the SDLT guidance on GOV.UK.