How can you tell if you have overpaid stamp duty on your purchase and how do you claim a refund?
Overpaying stamp duty often happens these days because of the enormous complexity of the SDLT rules, eg, there are five different tables of stamp duty rates and some extremely complicated reliefs such as Multiple Dwellings Relief, the relief for “granny annexes” within the stamp duty 3% surcharge plus considerable uncertainty as to what is a “dwelling” for SDLT and when a property is classified as of mixed residential and non-residential use.
All of these factors affect the correct rate of stamp duty and it is little wonder that conveyancers often err on the side of caution and advise their clients to pay the maximum rates of SDLT when on closer analysis this turns out to have been too much.
“Which” magazine has estimated that 15,700 buyers paid the stamp duty surcharge when they should not have done so and made refund claims.
Who does the 3% surcharge apply to?
The stamp duty surcharge applies to individuals buying a second or additional residential property and to companies and other non-natural persons buying a first or additional residential property.
The rules are extremely complicated for what in concept seems to be a simple and straightforward objective of imposing a stamp duty surcharge on second homes and buy to let residential property.
For example, if the property you are buying has a “granny annex” then you may be treated as buying two dwellings for the purpose of the stamp duty surcharge but if one of the dwellings is worth at least 2/3rds of the entire value then you can ignore the “subsidiary dwelling” for the purpose of the 3% surcharge, but you can still take that dwelling into account for the purposes of reducing the stamp duty chargeable using the relief for the purchase of multiple dwellings or MDR.
You can read more about this here and here.
How Patrick Cannon can help with your appeal
If you think that you have overpaid stamp duty on your residential purchase because for example MDR might have applied, or the property was derelict then I can assist you by advising you on making a refund claim to HMRC and if necessary appealing an HMRC decision to the tax tribunal on your behalf.
Unlike many firms advising in this area I give clear advice and charge an agreed fixed fee up front and do not seek a percentage of the tax saved.
Please use the contact form below to get in touch if you would like help with a stamp duty refund.
Is there a deadline for appeals?
Yes, the basic rule is that a refund claim cannot be made more than 12 months after the filing date for the original SDLT return ie 14 days after completion of the original purchase.
However, in certain special cases a stamp duty refund claim can be made to HMRC up to 4 years after the transaction concerned.
Even if the time limit for a refund claim against HMRC has run out there may still be grounds to claim against your professional adviser and their insurers if they wrongly caused you to overpay stamp duty and normally you have 6 years from the date the stamp duty was paid in order to make such a claim or if greater, 3 years from when you first could have discovered that you had overpaid.
How long does a stamp duty refund take?
Normally in my experience HMRC will issue the refund within a month or so although in certain cases where a known claims firm is involved with a history of making dodgy refund claims they may withhold any refund while they enquire into the claim.
Even if HMRC pay the refund promptly they will often then open an enquiry into the refund claim just to check that the facts meet the conditions for the relief claimed.
If following their enquiry they decide that the refund should not have been made they will issue a closure notice requiring repayment of the tax claimed and this decision can where appropriate be appealed to the tax tribunal.
Should you ask Patrick Cannon to assist you?
Given the significant amounts of stamp duty now at stake any potential refund is likely to be valuable and justify the time spent looking into it.
If you think that there may be grounds for a refund then get in touch today using the contact form below.
Frequently Asked Questions
This depends on a number of factors including how many questions HMRC are seeking answers to, the detail and complexity of the factual and legal issues involved, the speed or otherwise with which the taxpayer and the HMRC investigator deal with the correspondence and whether there are matters that have to be referred for legal advisers on either side for further advice.
It is now not unusual for tax investigations to last more than 12 months and sometimes 5 or more years especially where tax avoidance schemes are involved. What seems clear is that tax investigations seem to be taking longer as HMRC become more aggressive in their approach and tend to assume the worst, especially when it comes to assessing penalties they say are due for any underpayment of tax later found to have been due.
This can be for a number of possible reasons that include suspected omission of income, over claimed deductions, your business is of a type that is being targeted by HMRC for compliance checks, or a risk assessment has thrown up possible cash (undeclared) receipts or undeclared drawings, high expense claims or late filing of tax returns and payment of tax. HMRC’s guidance is published here.
If you are suspected of committing fraud, HMRC will make a thorough investigation into your affairs, including your financial conduct around the time you are thought to have committed tax fraud. This will come about due to suspected irregularities in your tax affairs and will need to be investigated before a decision is made as to whether fraud has actually taken place.
During the tax fraud investigation process you might be issued with a Code of Practice 9 (or COP 9 for short). This gives you the opportunity to disclose deliberate and non-deliberate financial misconduct that may have led to the irregularity in question. Read on here to find out more about this option and what it entails.
If you have received an enquiry or investigation from HMRC, contact Patrick Cannon today to get advice and representation against HMRC.
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For professional and insurance reasons Patrick is unable to offer any advice until he has been formally instructed.