A Court of Appeal ruling has confirmed that properties needing repair are still liable for residential rates of stamp duty tax, contrary to the claims of “rogue” agents.
HM Revenue & Customs has warned home buyers to beware bogus claims from agents promoting schemes to avoid stamp duty.
In June, a Court of Appeal judgment in the case of Mudan & Anor vs HMRC confirmed that housing that is in need of repair is still subject to residential rates of stamp duty.
This cannot be reclaimed on the basis that the property was uninhabitable at the time of the purchase, due to its poor condition, according to HMRC.
If a property requires repairs but retains the fundamental characteristics of a dwelling, it is still suitable for use as a dwelling and attracts residential rates of stamp duty, the ruling found.
A key factor in determining suitability is whether a property had been previously used as a dwelling, HMRC says.
HMRC deputy director of compliance assets Anthony Burke says: “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.”
