Homebuyers urged to beware of scams

Solicitors need to caution homebuyers of fraudulent agents offering misleading claims for Stamp Duty Land Tax repayments
In light of recent developments, homebuyers in the UK are being alerted to the dangers of fraudulent agents claiming to secure repayments for Stamp Duty Land Tax (SDLT), particularly in cases involving properties that require repairs. HM Revenue and Customs (HMRC) has taken a strong stance against dishonest practices following a landmark Court of Appeal decision in the case of Mudan & Anor v HMRC. This ruling confirmed that properties needing repair are still chargeable at residential rates of SDLT, contradicting claims that such properties can be deemed non-residential.
Many tax agents have been advertising their ability to recover SDLT fees based on the alleged uninhabitability of properties, often presenting this service for a fee. However, HMRC warns that such claims can lead to financial liability for homeowners, including penalties and interest on the full amount of SDLT originally paid. Anthony Burke, HMRC’s Deputy Director of Compliance Assets, emphasised the implications of inaccurate claims stating "If the claim is inaccurate, you could end up paying more than the amount you were trying to recover."
The recent Court of Appeal verdict supports HMRC's view that houses requiring significant repairs but still considered suitable for living purposes remain subject to SDLT at residential rates. Key criteria include whether the property was previously occupied as a dwelling. Homebuyers must consider these factors before engaging with agents who promise refunds based solely on the property's condition.
For instance, Joe, a homebuyer who purchased a home in London for £1,100,000, faced a similar situation. After his solicitor processed the SDLT return, Joe learned that only £53,750 was owed at the residential rate, despite the property needing extensive modernisation. An advertisement from a repayment agent lured him into filing a claim that falsely suggested he could receive a refund of £9,250 based on the property’s uninhabitable status. Ultimately, after claiming the refund, HMRC found Joe’s property to be residential and sought repayment of the SDLT, along with interest and penalties, leaving him with significant financial burdens.
To protect themselves, homebuyers are advised to carefully review SDLT guidance on GOV.UK and consider the integrity of the agents offering assistance. SDLT is a self-assessed tax, and responsibility for accurate claims lies squarely with the taxpayers, making vigilance essential in these transactions.