HMRC has today issued a warning to new property owners about cold calls in connection with Stamp Duty refunds for ‘Multiple Dwelling Relief’ MDR.
What is Multiple Dwellings Relief (MDR)?
MDR for Stamp Duty Land Tax (SDLT) is a relief that can be claimed when a qualifying taxpayer purchases more than one 'dwelling' in the same transaction. For example, buying a residential property with a genuine annex or ‘granny flat’ as part of one transaction provided there is sufficient privacy and privacy for occupants of the two dwellings. That said, caution needs to be taken. For example, a locked, connecting door between the main property and the ‘granny flat’ that has a separate lounge, bedroom, kitchen, and bathroom is not enough. That said, if true privacy can be achieved with separate entrances and with the connecting door bricked up, this may be achieved. It could even be a home with the 2nd dwelling being an office.
The issued of connectivity, privacy and security are key to HMRC granting MDR.
Rogue Agent Claims
HMRC suggests it has seen examples where rogue agents sign you up make spurious claims on a ‘no win no fee’ basis.
The rogue tax agent then takes their fee off your £5,000 refund and away they go. In some cases, HMRC suggest MDR reclaims have been as much as £50,000 or £60,000. Here are some examples they gave:
HMRC Then Investigates You
You have had your stamp duty refund; your tax agent has been paid and now HMRC comes ‘knocking’ on your door only to rule against your claim and then reissues you will the full stamp duty bill plus interest plus late payment penalties. You have lost out financially paying the stamp duty in full please agent fees, HMRC interest and late payment penalties. Sometimes, as we see in the above HMRC example, these can be huge sums.
Comment – Check First
If you ever receive a ‘cold call’ along these lines or indeed any other ‘cold call’, be aware. Most regulators, including the FCA have banned cold calling. If you are not sure, always approach your original conveyancers to ensure the correct stamp duty was paid or seek independent legal and tax advice on the same, or even contact HMRC on 0300 2003 510.