Stamp Duty  

HMRC loses stamp duty case

HMRC loses stamp duty case

A couple has won an appeal against HM Revenue & Customs, in which a tax tribunal ruled they did not have to pay a higher stamp duty charge because the property could not immediately be lived in.

A first-tier tax tribunal held in Bristol in January found a couple who bought a derelict property in Weston-super-Mare, with the intention of demolishing the building and rebuilding on the land, were not liable for an additional stamp duty surcharge. 

A 3 per cent stamp duty charge has been in place on the purchase of second homes or purchase by a company since April 2016.

The couple bought the property via a company structure for £200,000, for which HMRC had amended their tax return and increased the stamp duty payable from £1,500 to £7,500. 

Despite the derelict nature of the property, HMRC believed the purchase was subject to the higher stamp duty charge because the building was capable of being used as a dwelling at some point in the future. 

But the tribunal found the property was in such a dilapidated state, with the presence of asbestos, that it was not suitable for use as a dwelling and the higher stamp duty rate did not apply. 

Buy-to-let broker Commercial Trust stated the judgment suggested buy-to-let investors may have a case for exemption from the 3 per cent surcharge if their property is uninhabitable at the time of purchase.

A Commercial Trust spokesperson said: "Potentially, this ruling could represent an opportunity for retrospective claims from buy-to-let investors who have paid the additional charge on properties that were uninhabitable at the time they were bought."