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HMRC changes SDLT guide - buy to let investors may have overpaid

A tax specialist says the HMRC has amended its guidance on stamp duty in such a way as to suggest many buy to let investors may have overpaid.

Cornerstone Tax, a stamp duty advisory practice, found that the Additional Dwelling Supplement - the three per cent stamp duty surcharge introduced in 2016 - could only apply where the transaction consisted wholly of residential properties. 

The practice found that in certain circumstances, the default minimum rate of one per cent - which remained on the statute book - was actually still in force.


Now a statement from Cornerstone says: "After several legal cases between Cornerstone Tax and HMRC over four years, HMRC has recently amended its online guidance to reflect this correction. Due to the incorrect guidance, many developers and investors have paid three per cent on the residential element of a multiple dwellings relief claim, and not the one per cent minimum rate that they were eligible for.”

Startlingly, the company adds: “In most cases, this amounts to a 200 per cent overpayment of the tax that was due.”



David Hannah, Cornerstone’s chairman and chief executive, says: "As a firm, we will continue to challenge capricious and legally incorrect HMRC interpretations of the law, where we believe it is in the taxpayers’ best interests. We currently have a number of cases before the courts on multiple dwellings relief, mixed use properties, and other important issues to the taxpaying public. 

“We believe that it is vital to clarify exactly what the law means, to ensure that taxpayers are not at risk of paying too much tax, simply because the Revenue choose to word their guidance in a manner which favours them.

“It remains to be seen how many cases of overpayment have occurred, but at Cornerstone Tax, we are aware of several cases where the overpayments amount to several hundreds of thousands of pounds. The total bill for repayments could run into tens of millions of pounds, given the popularity of 'convert to rent' and 'convert to sell' schemes, which have been run on commercial properties in the last four years.”

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  • David Lester

    Bit confused, my wife and I have brought a couple of BTL properties since 2016 and paid the extra 3%, does the above article suggest that we have overpaid?


    Bit confused also David. Be keen to get clarity

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    • Mr P
    • 08 December 2020 12:03 PM

    It's worth investigating any SDLT payment you have made. We have had a number of successful refund claims and frequently use the Multiple dwelling relief. Cornerstone are currently processing a refund close to £30K, we haven't used them before but hopeful. Most companies that specialise will retain 20-25% of the claim but that's a worthwhile investment in our view.


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