A leading tax barrister has reported a 285% uplift in stamp duty refund cases for the period of Covid-19 lockdown – March-June 2020 – compared to the same period last year.
Patrick Cannon, who specialises in stamp duty disputes with HMRC, believes that the large increase in claims could be linked to the Covid-19 outbreak, as a result of homeowners and investors having additional time on their hands.
Buyers and investors are sometimes led by their conveyancers to pay stamp duty (SDLT) when they are not legally required to do so.
Mr Cannon explained:
“Homebuyers sometimes overpay stamp duty because their conveyancers either don’t have the information they need to decide that a stamp duty relief applies, or they wrongly decide that a relief cannot be claimed.
“Conveyancers, on the whole, take a conservative view – many prefer not to make a claim if there is any doubt, so that they do not risk coming into conflict with HMRC.
“I have specialised in this area for many years, but I have never received so many enquiries for my support on reclaims within such a concentrated amount of time.
“I believe it’s a case of people having additional time on their hands, and an attempt to recoup funds as a direct result of Covid-19-related losses in income.”
There are a number of instances when stamp duty relief applies, such as on second homes, mixed use properties and multiple-dwellings.
“Stamp duty is higher for residential properties, but the rules are so complex that many conveyancers and advisers fail to understand them properly.
“Some think that the 3% additional rates are payable when they are not.
“In other instances, they fail to factor in multiple dwellings relief, where a property has more than one self-contained unit, such as a house with an annex.
“Alternatively, those who buy a mixed-use property – i.e. both residential and non-residential – are eligible to pay lower rates of stamp duty, but the definition of what is a mixed-use property is currently a matter of debate with HMRC.
“There are several cases currently before the Upper Tribunal awaiting a clearer definition.”
Cannon advises homeowners to use the lockdown period to check the details of any recent purchases.
He also stresses that, because of the pandemic, HMRC has relaxed strict time limits when it comes to the higher 3% rate.
“In most cases the refund claim should be made to HMRC within 12 months and 14 days of completing the purchase, but in certain cases, a period of four years is available.
“HMRC’s SDLT calculator enables property owners to work out the rates of stamp duty.
“However, in my experience, many people find the process of claiming back their stamp duty complex and time-consuming, especially after the inevitable stress of house-buying and prefer the reassurance of an experienced adviser dealing with HMRC on their behalf.”