Stamp Duty Land Tax - Multiple Dwellings Reliefs

When purchasing a property, a buyer is liable to pay stamp duty land tax (“SDLT”). The amount of SDLT payable is determined, amongst other things, by the purchase price and type of property being purchased.

If you purchase two or more dwellings in a single transaction, or in a series of linked transactions, you may be entitled to claim a SDLT relief called Multiple Dwellings Relief (“MDR”), which can result in a considerable tax saving. It is therefore important that a buyer obtains the correct advice on the SDLT payable for a transaction, any reliefs that they may be eligible to claim and that such reliefs are claimed correctly and within the right time limits. 

A recent decision in the First-Tier Tribunal has confirmed the position in relation to MDR claims (Smith Homes 9 Limited v HMRC [2022] UKFTT 5 (TC)) and the consequences of claiming a relief too late.

In this case, the taxpayer had purchased an office building in Essex for £1,299,188. The taxpayer submitted a tax return to HMRC shortly after completion of the purchase and paid £54,495 in SDLT claiming that the property was ‘non-residential’. He did not, at this stage, claim MDR.

Some 14 months later, after the deadline for amending the SDLT return had passed, the taxpayer made a stand alone claim for MDR for repayment of overpaid SDLT. The taxpayer stated that the overpayment was because he did not know, or could not reasonably have known, that MDR was available.

To support the taxpayer’s claim that MDR was available, he submitted copy certificates which showed that the property had the benefit of permitted development and that Harlow District Council had approved a development proposal for 33 residential units. The taxpayer claimed that as MDR was available, he should have only paid £38,976 in SDLT.

The Tribunal found that in accordance with Section 58D(2) Finance Act 2003, a claim for MDR must be made in an SDLT return, or in an amendment to such a return. The stand alone claim was found not to have been made in accordance with the relevant legislation, and therefore failed.

Further, section 6(3) of the Finance Act 2003 provides that "…an amendment [to a land transaction return] may not be made more than twelve months after the filing date".

The Judge found that (1) as the taxpayer ought to have known before the end of the 12 month period that such a relief was available, as guidance was in the public domain and (2) he did not amend the SDLT return  within the permitted timescale (or amend the return at all - he submitted a stand alone claim), he was not entitled to the repayment of the additional £15,519 paid in SDLT. 

This case is significant as it establishes that attempts to circumvent the time limits for amending a SDLT return by making a stand alone repayment claim are not possible. It is therefore extremely important that SDLT is correctly calculated in the first tax return, to prevent losses as experienced by Smith Homes 9 Limited.

Here at Samuels our conveyancing team can work alongside your accountant in order to ensure that all available SDLT reliefs are identified and claimed for correctly, within the relevant time period. If you are looking to make a multiple dwelling purchase, please contact our expert team to find out how we can help you.

Alternatively, if you believe your accountant or solicitor has been negligent in failing to advise you properly about SDLT reliefs, and you have lost out on a tax saving, please get in touch with out specialist professional negligence team who can assist you with any potential claims against them.