"Homebuyers should be cautious of allowing someone to make a Stamp Duty Land Tax repayment claim on their behalf"
- Anthony Burke - HMRC
Homebuyers are being urged to steer clear of misleading Stamp Duty Land Tax (SDLT) refund offers following a significant Court of Appeal ruling that strengthens HM Revenue and Customs' (HMRC) approach to tackling bogus repayment claims.
The court’s judgment in Mudan & Anor v HMRC confirmed that residential properties requiring repair still fall under the residential SDLT rate. The decision upholds HMRC’s position that cosmetic or structural issues do not render a property non-residential if it retains the essential characteristics of a dwelling.
Some tax agents have been advertising services claiming they can secure SDLT refunds for buyers who purchased properties in poor condition. These agents often argue, incorrectly, that the home qualifies as non-residential because it was uninhabitable at the time of sale. In many cases, buyers are left liable for the full amount of SDLT, as well as penalties and interest, when these claims are later rejected.
HMRC is currently taking enforcement action against dishonest repayment agents, using both civil and criminal measures. The warning follows a surge in activity from rogue agents who target buyers shortly after they complete their property purchase, offering to reclaim tax on a 'no win, no fee' basis.
The department advises buyers to consult the SDLT guidance on GOV.UK if they are unsure about the rules.
One illustrative example involves Joe, who bought a home in London for £1.1 million. His solicitor submitted the SDLT return and paid £53,750 based on the residential rate. Because the property needed a new boiler, rewiring and damp proofing, Joe could not move in immediately.
Not long after completing the purchase, Joe received an advert in the post from a repayment agent, offering to file an SDLT refund claim. The agent claimed that the house’s condition meant it should qualify for non-residential rates. They filed the claim and secured a £9,250 repayment, deducting a 30% fee before sending Joe £6,475.
However, HMRC later opened a compliance check and ruled that the property was residential. Joe was required to repay the full £9,250, in addition to interest and a penalty. The agent who submitted the claim stopped responding to his emails and calls, leaving Joe financially worse off.
The Court of Appeal’s decision reinforces HMRC’s message that only properties fundamentally unsuitable for use as dwellings at the time of purchase could potentially fall outside residential SDLT rates. Prior residential use and basic livability remain central to classification.
Anthony Burke, HMRC’s deputy director of compliance assets, explained, “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.”
