Stamp duty refunds can be claimed from HMRC for a number of things with the main ones being for:
(1) a stamp duty refund of the 3% higher rates which apply when a main residence is bought before the old one is sold;
(2) a stamp duty refund of the 2% non-UK resident surcharge once the buyer becomes a UK resident and
(3) a stamp duty refund when a claim for multiple dwellings relief is made after the purchase of two or more dwellings.
Buyers also apply for a stamp duty refund when they reassess the property they have recently purchased as either mixed residential and non-residential or as uninhabitable, in each case leading to a refund of the excess SDLT paid on the purchase at full residential rates of stamp duty.
What is a stamp duty rebate?
A rebate of stamp duty can be obtained from HMRC when too much stamp duty has been paid on a purchase of a residential property. Generally, you have 12 months from the 14th day after the effective date of the land transaction to apply for an SDLT refund claim to HMRC but you can also make an overpayment relief claim within 4 years in certain limited situations.
Are stamp duty refunds a scam?
Beware of companies cold calling or sending you unsolicited mail offering to apply for a stamp duty refund for you. They constantly research the Land Registry for recent residential property sales and then check the online sales particulars to identify properties with any possible features that conceivably could lead to a stamp duty refund. Examples are houses with an annexe (MDR) and homes with lots of lands (mixed-use) or that look derelict (uninhabitable dwellings).
How do scammers operate?
While there are several responsible stamp duty refund specialists out there, there are also many stamp duty claims farmers who operate close to, or over the line, of what is legal, decent and honest. Typically, the latter firms will exploit the stamp duty refund claim process by putting in highly speculative SDLT refund claims to HMRC which rely on HMRC’s highly confusing policy of paying out the refund claim within a matter of weeks without at that stage, making a detailed check.
By law, HMRC then have 9 months from when the claim was made in which to carry out a detailed check and then ask for the refund back with interest (and a possible penalty). In the meantime, the claims farmer has obtained the refund payment from HMRC into their account, deducted their fee and passed the net refund onto the client.
They either fail to warn their client that the refund may be subject to a detailed check by HMRC and possible clawback later on or heavily downplay this possibility by claiming for example, that they have discussed the claim on the telephone with HMRC and have been assured that it is solid.
How do you know if you are entitled to receive a stamp duty refund?
The best way to know is by asking an independent professional stamp duty refunds specialist such as a barrister or solicitor for an objective, balanced legal assessment of whether a stamp duty refund claim can be made. If their advice is that there are reasonable grounds to make an SDLT refund claim, then they will be able to make the claim to HMRC for you.
The advantage in instructing a barrister to make the claim is that they are not permitted to hold client monies and so HMRC will make the refund payment direct to your bank account in full.
What is a stamp duty refund specialist and what should you do if you are contacted by one?
A stamp duty refund specialist is anyone approaching you and offering to obtain a stamp duty refund for you from HMRC. If you are contacted by one you should check that under their terms of engagement, they will not take their fee or commission until the 9-month HMRC enquiry period has expired without HMRC opening a check into the claim or if a check is opened, only after the check has been completed and the refund confirmed by HMRC.
Do not be taken in by claims that they will be able to clear the refund with HMRC straightaway and that a check will be very unlikely. Also, do not agree to the fee being taken up-front even with a promise to refund the fee later if the claim is checked and successfully challenged by HMRC.
How do I know if a stamp duty refund specialist is legitimate?
At the moment stamp duty refund specialists are not required to be regulated. This is a problem for clients and HMRC and HMRC are currently consulting on ways to protect taxpayers from dodgy tax refund agents.
What are the risks of a stamp duty refunds?
The biggest risk is that having received and spent the refund, HMRC then open a detailed check into it within 9 months and then ask for the money back with interest. There is also a risk of a penalty if the refund claim was made without a reasonable basis for making it.
How do you apply for a stamp duty refund?
Most stamp duty refund claims must be made by post to BT Stamp Duty Land Tax, HM Revenue and Customs, BX9 1HD. A claim for a refund of the 3% higher rates can however be commenced online here and a claim for repayment of the 2% non-UK resident surcharge can be made here.
Why you should seek independent legal advice before you make a stamp duty refund claim?
By instructing a barrister or solicitor to review your refund claim, you will receive independent and objective advice about whether there is a reasonable basis to make the claim. That way, you should be confident that if you make the claim, HMRC are likely to agree with it even if they open a check into the claim. However, even some solicitors firms operate claims refund companies that work on success fees and you need to be sceptical of them because of the commercial incentive for them to make speculative claims.
How can you support us with our stamp duty refund and who is my ideal client?
As a barrister in independent practice who is authorised to accept instructions direct from members of the public, I can review your potential SDLT refund claim and offer you objective advice based on my extensive experience in representing clients before the tax tribunals in cases concerning SDLT refunds.
If my advice is positive, I can make the refund claim for you and any refund will be paid by HMRC in full directly into your bank account. I work on the basis of fixed fees agreed upon upfront so that you have certainty about the cost and I have no financial incentive to put in a speculative claim. My ideal client is a person who understands the importance of obtaining objective advice before making a claim. The old adage that free advice is worth the price you pay is as true here as in other areas.
In summary, you should avoid using the stamp duty refund firms that make speculative refund claims to HMRC on the basis of success fees and who take their fees before the end of the 9-month HMRC enquiry period. My concern is that these claims farmers’ business model is to overwhelm HMRC with more dodgy refund claims that they can possibly check so that a good proportion of speculative and unreasonable claims get through because HMRC does not have the resources to check every claim. You can avoid supporting this behaviour by only using an independent objective legal adviser.