HM Revenue and Customs (HMRC) has warned homebuyers to be cautious of agents offering to reclaim Stamp Duty Land Tax (SDLT) on properties that need repairs.
The warning follows a Court of Appeal ruling in the case of Mudan & Anor v HMRC, which confirmed that homes requiring repairs remain subject to residential SDLT rates.
The judgment stated that claims for repayment based solely on a property’s condition are not valid.
HMRC said some agents advertise that they can secure refunds by arguing that a property is non-residential because it is uninhabitable.
Buyers making such claims may face repayment of the full tax along with penalties and interest.
Anthony Burke, HMRC’s Deputy Director of Compliance Assets, said: “The Court of Appeal’s decision is a major win, protecting public funds. Homebuyers should be cautious of allowing someone to make a Stamp Duty Land Tax repayment claim on their behalf. If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.”
HMRC is using civil and criminal powers to act against false claims.
In one case, a London buyer paid £53,750 in SDLT on a £1.1 million property.
After an agent claimed a refund on the basis that the house needed repairs, he received £6,475 after the agent’s fee.
HMRC later ruled the claim invalid, leaving him to repay the tax, plus interest and a penalty, with the agent refusing to cover the costs.
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