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If you have purchased a residential property recently, there’s a possibility you might have been wrongly charged higher rates of stamp duty (SDLT) than you were legally required to pay. Alternatively, if you have replaced your main residence and sold your previous one only after completing your new purchase then you can claim back the additional 3% stamp duty that you had to pay. If you think you have been overcharged or are due a refund, you can make a stamp duty repayment claim to HMRC.
Homebuyers sometimes overpay stamp duty because their conveyancers either don’t have the information they need to decide that a stamp duty relief applies, or they wrongly decide that a relief cannot be claimed when the relief may be available. Conveyancers, on the whole, take a conservative view and even though a claim could be made, they may prefer not to make it if there is any doubt so that they do not risk coming into conflict with HMRC.
You need to check the details of your purchase and then consider whether a stamp duty relief applies. In most cases, you have to make the refund claim to HMRC within 12 months and 14 days of completing your purchase.
In cases of claiming back the 3% higher rates for replacing your previous main residence, your claim must be made within 12 months of the sale of your previous main residence.
There is a huge range of stamp duty reliefs but the main ones you are likely to be concerned about are as follows.
First time buyers can access lower rates of stamp duty for purchases up to £500,000. The relief is quite fiddly for example in relation to shared ownership properties but sometimes conveyancers wrongly assume that a purchaser cannot claim it and so a claim is not made when it should have been. If you think that you may qualify it is worth checking whether a repayment claim can be made.
Stamp duty is higher for second homes and additional residential properties but the rules are so complex that many conveyancers and advisers fail to understand them properly and sometimes think that the 3% additional rates are payable when they are not or fail to factor in multiple dwellings relief which can substantially lower the overall stamp duty charge. It is always worth checking the position in case stamp duty was overpaid and a refund claim is available.
Those who buy a mixed residential and non-residential property are eligible to pay lower rates of stamp duty, but the definition of what is a mixed-use property is currently a matter of debate with HMRC and there are several cases currently before the tax tribunal awaiting a clearer definition. If you think that your property qualifies as mixed-use then an SDLT repayment claim should be considered and must be made within 12 months and 14 days of your purchase.
Multiple Dwellings Relief is worth considering if the property you have bought contains more than one self-contained unit such as one or more annexes within the house or self-contained accommodation in outbuildings on the property. If you have overpaid stamp duty because your conveyancer failed to claim the relief you can amend your SDLT return and make a claim to lower rates of SDLT.
You may choose to make the claim yourself – by using HMRC’s SDLT calculator to work out the rates of stamp duty, and then writing to HMRC to claim for the amount you think you have overpaid.
There is a time limit on when you can make a claim, though. Depending on the nature of your claim, you may have to make the claim within 12 months and 14 days of the purchase of your property or in some cases 4 years from the filing date for your SDLT return. The refund rules are complicated but if you miss the deadline for making a claim you may still be able to claim against your conveyancer.
Many people decide that they want expert help and advice in making a refund claim especially when the stamp duty rules are so complicated and they prefer not to risk making a claim and then find that down the line HMRC say that they were not entitled to the refund and require them to repay the refund plus interest and penalties.
Generally, a refund claim takes several weeks to be processed and repaid by HMRC. The important point to note however is that HMRC operate a “process now/check later” procedure which means that they will normally pay out the refund after some basic checks, but will then examine the claim in more detail within the period of 9 months after the claim.
Where the refund claim looks questionable, HMRC will then open an enquiry into the claim and require detailed information in support of it. If they then disagree that a refund was due, they will issue a closure notice requiring repayment.
The important point is that just because HMRC pay the refund initially, this does not mean that it will not be challenged later on. Some SDLT refund claims companies will charge a fee as a percentage of the amount refunded, but you should always ensure that this fee is conditional on HMRC not later challenging the refund. Some claims companies with a record of making dodgy refund claims find that HMRC do not automatically pay out refunds, and always enquire into their refund claims before being satisfied that a refund should be made.
You can make the stamp duty repayment claim yourself and this will save you the fee charged by an adviser to do it for you. HMRC has published guidance on making a refund claim here.
However, in my experience, many people find the process of claiming back their stamp duty complex and time-consuming, especially after the inevitable stress of house-buying and prefer the reassurance of an experienced adviser dealing with HMRC on their behalf.
If you believe you have paid an incorrect amount of stamp duty land tax or you have received a penalty, it is possible to make an appeal to HMRC on a transaction, providing you have a viable reason as to why you are making that claim. To appeal a transaction, it must have been within a 4 year period or if you have received a penalty, it must be addressed in writing within 30 days of the penalty notice.
HMRC make it easier to apply for a refund with their online application form as well as a printable form that can be posted to their headquarters.
If you own multiple dwellings, you still need to pay stamp duty land tax, however, you may claim a refund on your second home through multiple dwellings relief if your purchases fall into the criteria outlined by HMRC and those we spoke of above such as if the property you have bought contains more than one self-contained unit such an annexe.
Once you have sold your previous main residence, you have 3 months to claim a refund on your SDLT, you can also claim 12 months from the filing date for your original SDLT return. There are also certain cases in which you could have up to 4 years from completion to make a repayment claim but that is subject to circumstance.
An SDLT refund can be claimed if you have purchased a new main residence before selling your previous one, meaning you owned multiple properties. You then must have sold your previous residence within 3 years of purchasing your current one.
As a tax barrister licensed by the Bar Standards Board to act directly for members of the public, I can help with assessing your eligibility for an SDLT refund. I can also take over the whole business of reclaiming stamp duty – from calculating how much you are owed, collating all the necessary information, filing your claim and corresponding with HMRC and arranging the stamp duty refund payment.
In some circumstances, it may be necessary for me to pursue a conveyancing adviser for negligence, if they failed to inform you of SDLT savings at the time of your purchase and you are now out of time to make an SDLT repayment claim.
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