Home care provider Marcus & Marcus has emerged victorious after a seven-year tussle with HMRC, receiving a £20,000 refund after overpaying stamp duty.

In 2015, the company acquired a property consisting of several buildings including a main house, an annexe and a summerhouse. After submitting an SDLT return and paying £33,750, Marcus & Marcus became subject to an HMRC enquiry. The tax authority found the property was liable for SDLT of 15%, equal to £131,250 – representing an increase of £97,500 or 289% additional tax – and issued a closure notice to that effect.

Marcus & Marcus appointed Cornerstone Tax in 2018 and subsequent negotiations that year between both parties reached an agreed conclusion that a new calculation – Multiple Dwellings Relief (MDR) – would be applicable and it would be done on a ‘just and reasonable apportionment’.

HMRC’s assessment combined the main house together with an office and summerhouse (two entirely separate buildings on the plot). Under the agreed metrics, this pushed the value of what HMRC assessed to be the ‘main house’ to £537,000 – over £500,000 and therefore excluded from the MDR calculation

By contrast, Marcus & Marcus and Cornerstone Tax contended that the office and summerhouse comprised part of the annexe, and therefore remained separate from the main dwelling. Under the agreed metrics, this would give the main house an apportioned value of £404,867 – and therefore subject to MDR.

Unable to reach agreement, the parties brought the matter before the First Tier Tax Tribunal in April 2022. The judge found that the summer house was occupied with the main house and the office was part of the dwellings in the annexe. It was determined that the total SDLT liability at the time of purchase should have been £13,749, and Marcus & Marcus was therefore due a refund from HMRC of £20,001.