01/08/2025
Homebuyers Warned Against Stamp Duty Repayment Scams
HM Revenue and Customs (HMRC) is warning people purchasing properties to be vigilant of tax agents offering to secure Stamp Duty Land Tax (SDLT) repayments on their behalf.
The warning comes after a landmark Court of Appeal decision confirmed that properties in need of repair are still chargeable at the residential rates of SDLT, regardless of their condition.
Some agents have suggested that, for a fee, they can reclaim SDLT by arguing that a property is non-residential because it's "uninhabitable".
However, a recent Court of Appeal judgment in the case of Mudan & Anor v HMRC has affirmed that housing which retains the fundamental characteristics of a dwelling is still considered residential and therefore attracts residential rates of SDLT. A key factor in this determination is whether the property had been previously used as a dwelling. HMRC is taking decisive action on these spurious claims, using civil and criminal powers to deal with those who undermine the tax system. Anthony Burke, HMRC's 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."
The warning is best illustrated by a common example: Joe buys a house for £1.1 million and pays the residential rate of SDLT, which amounts to £53,750. The house requires modernisation, including a new boiler, rewiring, and damp proofing. An agent later persuades Joe to claim a refund of £9,250 on a 'no win, no fee' basis, arguing the property was non-residential. Joe receives a repayment, but after the agent deducts their 30% fee, he is only left with £6,475. Later, an HMRC compliance check concludes the property was residential, leaving Joe liable for the full £9,250, plus interest and a penalty. The agent, having already taken their fee, refuses to help, leaving Joe out of pocket.
HMRC is encouraging anyone who is unsure of the rules to check the SDLT guidance on GOV.UK to avoid similar scams.
The warning comes after a landmark Court of Appeal decision confirmed that properties in need of repair are still chargeable at the residential rates of SDLT, regardless of their condition.
Some agents have suggested that, for a fee, they can reclaim SDLT by arguing that a property is non-residential because it's "uninhabitable".
However, a recent Court of Appeal judgment in the case of Mudan & Anor v HMRC has affirmed that housing which retains the fundamental characteristics of a dwelling is still considered residential and therefore attracts residential rates of SDLT. A key factor in this determination is whether the property had been previously used as a dwelling. HMRC is taking decisive action on these spurious claims, using civil and criminal powers to deal with those who undermine the tax system. Anthony Burke, HMRC's 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."
The warning is best illustrated by a common example: Joe buys a house for £1.1 million and pays the residential rate of SDLT, which amounts to £53,750. The house requires modernisation, including a new boiler, rewiring, and damp proofing. An agent later persuades Joe to claim a refund of £9,250 on a 'no win, no fee' basis, arguing the property was non-residential. Joe receives a repayment, but after the agent deducts their 30% fee, he is only left with £6,475. Later, an HMRC compliance check concludes the property was residential, leaving Joe liable for the full £9,250, plus interest and a penalty. The agent, having already taken their fee, refuses to help, leaving Joe out of pocket.
HMRC is encouraging anyone who is unsure of the rules to check the SDLT guidance on GOV.UK to avoid similar scams.
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