Stamp Duty Refund Cold Call Warning

Published / Last Updated on 30/05/2022

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. 

  • Stamp Duty is a voluntary disclosure tax similar to self-assessment in that HMRC relies on you being honest and telling the truth.  When you file your self assessment return, HMRC assumes it is correct unless it investigates you at a later date and finds otherwise.
  • Multiple Dwelling Relief’ is the same.  You may have paid your stamp duty as normal e.g., for a property worth £400,000 including the annex.  So, you are in the 5% stamp duty band with a stamp duty bill in England of £10,000.  But if you could claim that part of it was commercial use, e.g., an office or stables worth say £100,000 in the transaction, your stamp duty bill would now be £5,000 on the £300,000 residential element of the property and £0 on the £100,000 office.  Meaning a stamp duty tax reclaim under MDR of £5,000.

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:

  • A claim that a bedroom could be a separate dwelling and in line for claiming ‘multiple dwellings relief’ because it had an en-suite and a built-in wardrobe which could be a kitchen if you added a microwave and a kettle.
  • An individual who claimed their house was not wholly residential because a paddock behind the garden was used occasionally to keep a neighbour’s horse - the agent advised that they were due lower stamp duty rates because the presence of the paddock made the transaction a mix of residential and non-residential property, which would incur a lower Stamp Duty payment.
  • A new owner of a six-bedroom house claimed it was not a wholly residential property because a room above a detached garage was used as an office.

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.

Explore our Site

Money MOT
T and C