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Recent home buyers warned over stamp duty refund claims

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New homeowners are warned about cold calls from agents who claim they’re owed a stamp duty refund, but which leaves them footing a large tax bill.

HMRC said it’s received a spate of stamp duty refund claims recently which have failed to meet “very specific criteria”.

It said agents have trawled Land Registry records and property search websites to target new homeowners, promising them money back on ‘unknowingly overpaid’ stamp duty.

Some of the cases include:

  • A homeowner was told they overpaid £60,000 in stamp duty. The agent said the home could be designated as two properties, but HMRC said it was clearly one property.
  • A claim that a bedroom could be a separate dwelling and is eligible for ‘multiple dwellings relief’ because it had an ensuite and a built-in wardrobe which “could be a kitchen if a microwave and kettle” were added.
  • A homeowner claimed their house wasn’t wholly residential because a paddock behind the garden was used occasionally to keep a neighbour’s horse. The agent claimed they were due lower stamp duty rates because the presence of the paddock made the transaction “a mix of residential and non-residential property”
  • 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.

The department said up to a third of claims for ‘multiple dwelling relief’ were incorrect and homeowners have been left to pick up the tab.

This is because the agent has taken their fee, but the homeowner has to repay incorrect refund claims with interest. Some also face penalties.

Nicole Newbury, HMRC director for wealthy and mid-sized business, said: “We are seeing obviously spurious refund claims that are never going to succeed; but will lead to an unnecessary bill for the customer.

“So, we are warning new homeowners not to get caught out by tax repayment agents promising easy money on a ‘no win, no fee’ basis. If it sounds too good to be true, it probably is. We want to help people get it right and avoid unnecessary tax bills, so treat promises of easy money with real caution.”

HMRC added that if anyone is approached about a stamp duty refund claim, they should check with their original conveyancer, take independent professional advice and check its guidance. People can also call its helpline on 0300 2003 510.

It advised people may get cold called or receive letters from agents claiming a refund could be due in the following cases:

  • Claims for multiple dwellings relief.
  • Claims house purchases should be charged at a lower rate because it contains something which is non-residential.
  • Claims homes purchased are uninhabitable, so you are charged at lower SDLT rates.
  • Claims that homes purchased with access to a communal garden mean you are charged SDLT at lower rates.
  • Claims there is no SDLT due o the transfer of property to pension schemes.

Stamp duty land tax (SDLT) is a tax on land transactions. In 2019/20, £11.6bn was collected.

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