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Tax payers urged to check stamp duty to avoid overpaying

Tax payers urged to check stamp duty to avoid overpaying

A tax consultant has urged buyers to get stamp duty calculations checked independently to avoid overpaying.

David Hannah, principal consultant at tax advisory Cornerstone, warned relying on basic online tax calculations was contributing to stamp duty errors, which could cost buyers thousands of pounds.

Mr Hannah said his firm achieved, on average, one repayment a day from HMRC where errors had been made.

Mr Hannah cited one case where a client received a letter about a possible stamp duty overpayment of £84,000 after purchasing a house. However, upon checking, the overpayment amounted to £357,000.

He warned that even solicitors were not immune from making stamp duty errors resulting in overpayments, such as multiple dwellings relief that had not been claimed for annexes.

Taxpayers can claim multiple dwellings relief when buying more than one dwelling where a transaction, or a number of linked transactions, include freehold or leasehold interests in more than one dwelling.

However, as a recent tribunal case showed, the rule is not easy to interpret.

According to Mr Hannah, claims for multiple dwellings relief counted for a significant proportion of refunds business at his firm.

Mr Hannah said: “[Buyers] need to get their stamp duty calculations checked - independently, I would suggest.

“I think they need to get them checked by somebody who is a specialist in the area, because we see altogether too many problems for my comfort.”

Another more recent case seen by the firm involved a property development company that had purchased a property for over £1.4m.

At the time of completion, the land benefited from planning permission to make structural alterations, with the aim to build nine residential dwellings including office space on the lower floors.

The firm found that the site had been incorrectly classified at the time of purchase, and was eligible for multiple dwellings relief at the time of completion.

A claim was submitted to HMRC to amend the stamp duty return, and secured a refund of almost £35,000 within a month.

Mr Hannah commented: “We have seen countless such examples over the last few years and yet the problem still persists."

He added: “Knowing that the SDLT you are going to pay on your property is accurate could be the difference between buying a house or not and we should be doing all we can to encourage the market back onto its feet”.

An HMRC spokesperson said: “Stamp duty is a self-assessed tax and we strive to give everyone the best tools to enable them to pay the right tax at the right time. This includes online guidance on how HMRC interprets the legislation and the requirements of its customers.

“When we recognise there is a clear error resulting in an overpayment of stamp duty we will take the necessary steps to ensure the amount is refunded to its customer in a timely manner.