Warning to new homeowners over tax refund claims

Stamp Duty Land Tax can be a complicated area, which is why seeking the appropriate advice is important.

New homeowners are being warned about cold calls from rogue tax repayment agents advising them to make speculative Stamp Duty Land Tax (SDLT) refund claims, which could leave them with large tax bills.

The warning comes after a recent spate of Stamp Duty Land Tax refund claims to HMRC failed to meet very specific criteria.

The agents have been known to call new property owners after finding them through Land Registry records and property search websites, promising money back on ‘unknowingly overpaid’ SDLT.

Recent analysis undertaken by HMRC suggests that up to a third of claims for ‘multiple dwelling relief’ refunds were incorrect.

HMRC raises enquiries on these claims, but sometimes this is after the agent has taken their fee, leaving the homeowner to pick up the difference. Incorrect refund claims must be repaid with interest, with some potentially facing penalties as well.

In one recent case, a letter from a rogue agent suggested a homeowner may have overpaid £60,000 worth of Stamp Duty Land Tax. The agent claimed the home could be designated as two properties, despite it clearly being one. This is not an isolated example - other cases include:

- A claim that a bedroom could be a separate dwelling and in line for claiming ‘multiple dwellings relief’ because it had an en suite and a built-in wardrobe which could be a kitchen if you added a microwave and a kettle.

- An individual who claimed their house was not wholly residential because a paddock behind the garden was used occasionally to keep a neighbour’s horse. The agent advised that they were due lower rates because the presence of the paddock made the transaction a mix of residential and non-residential property, which would incur a lower Stamp Duty Land Tax payment.

- A new owner of a six-bedroom house claimed it was not a wholly residential property because a room above a detached garage was used as an office.

Iain Mason, Head of Legal at Optimum Professional Services in Swindon, said: “This is a shocking example of fraudsters taking advantage of homebuyers, and we would urge people to be wary and not get caught out."

“Stamp Duty Land Tax can be a complicated area, which is why seeking the appropriate advice is important. There are genuine examples of properties where multiple dwellings relief applies but equally, the regulations are such that the purchase of more than six dwellings in one transaction may qualify as a non-residential purchase – meaning different tax rates and thresholds apply. As a self-assessment tax, the responsibility is with the buyer so if something looks too good to be true, it probably is.”

Anyone approached about a Stamp Duty Land Tax refund claim should check with their original conveyancer, take independent professional advice and check HMRC’s guidance by searching ‘Stamp Duty Land Tax’ on GOV.UK.

If you are buying or selling a house and need conveyancing for the purchase or sale, please get in touch with Optimum. Email Iain Mason

Iain Mason

Iain Mason

Head of Legal

Optimum Professional Services