Court of Appeal rules against HMRC on stamp duty

The Pollen Estate Trustee Company Limited and King’s College London have successfully overturned a judgement by HM Revenue & Customs in the Court of Appeal.

The Court of Appeal ruled when a charity purchases property jointly with a non-charity, stamp duty relief is available for its portion of the deal subject to a test based on the extent to which the charity’s share is used for charitable purposes.

In light of the judgment, HMRC has now invited claims for any overpaid stamp duty from charities that purchased a property jointly with a non-charity purchaser, satisfied the relevant conditions, but did not claim the relief.

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Relief is limited to circumstances where the charity used the greater part of its share of the property for a charitable purpose.

As an example of what the ruling means HMRC considered a charity and a non-charity jointly purchasing a non-residential property for £800,000, each owning a 50 per cent undivided share in the property.

If the charity intends to use its portion of the property wholly for charitable purposes the stamp duty due on the purchase is £32,000 (£800,000 times four per cent).

Charity relief is available on £16,000 of this, with £16,000 stamp duty payable on the proportion of the interest held by the non-charity purchaser.

There is only a limited window to get in claims to HMRC with calls for cash back made after the expiry of the 12-month amendment period time-barred.