HMRC has warned that consultants who claim they can reduce Stamp Duty bills for home buyers by claiming properties are uninhabitable or in need of significant renovation are often ‘bogus’.

Officials have made the comment following a recent court case – Mudan & Anor v HMRC – during which it was confirmed that housing or dwellings in need of repair are chargeable at the full residential rates of Stamp duty, and that repayment claims based solely on a property’s condition are ‘not valid’.

Stamp Duty reclaim

HMRC says that while some consultants have suggested that, for a fee, they can reclaim Stamp Duty the buyer has already paid by saying that the property is non-residential because it’s uninhabitable, making claims of this kind often leave the homeowner liable for the full amount of Stamp Duty, plus penalties and interest.

Ministers says that the Mudan & Anor decision confirms HMRC’s ‘long-standing’ view that if a property requires repairs but retains the fundamental characteristics of a dwelling, it is still suitable for use as a dwelling and attracts residential rates of Stamp Duty.

A key factor in determining suitability is whether a property had been previously used as a ‘dwelling’.

A key factor in determining suitability is whether a property had been previously used as a ‘dwelling’.

Warning buyers that those seeking to will face ‘decisive action’ by his department should they make ‘spurious’ claims including civil and even criminal penalties, Anthony Burke, HMRC’s Deputy Director of Compliance Assets, says that: “The Court of Appeal’s decision is a major win, protecting public funds.

“Homebuyers should be cautious of allowing someone to make a Stamp Duty Land Tax repayment claim on their behalf.

“If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.