Ker-ching! Stamp duty refunds soar during Coronavirus crisis

A tax and legal specialist says there’s been a huge rise in stamp duty refund cases between March and June - the peak Coronavirus crisis period.

London barriser Patrick Cannon says the surge is linked to the crisis because many more home owners and property investors have had time to investigate the problem of over-paid SDLT.

“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” explains Cannon.

He adds that having worked in the sector for many years, 2020 is the busiest he has seen in terms of refund cases, typically in 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 three per cent 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.”

In recent weeks, in response to the pandemic, HMRC has relaxed strict time limits on the payment of the three per cent surcharge.

“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” explains Cannon. 

“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.”