HMRC is warning homebuyers to beware of dodgy repayment agents who encourage them to wrongly claim back Stamp Duty Land Tax (SDLT). These agents often contact recent buyers, promising refunds based on claims that the property was “uninhabitable”, even when it clearly wasn’t.
The government’s warning comes alongside a real case where a taxpayer was misled into claiming an SDLT refund he wasn't entitled to. The result? He had to pay back the tax in full plus interest and a penalty, receiving far less than he expected, and learning that the responsibility still rests with the taxpayer, not the agent.
Tax Agents Targeting New Homebuyers
Many repayment agents are contacting individuals after they’ve completed their property purchase, often using data obtained from the Land Registry. These agents suggest that a refund may be due and offer to submit a claim on the buyer’s behalf.
The most common tactic? Arguing that the property was “uninhabitable” at the time of purchase and therefore qualifies for relief. But in most cases, the property doesn’t meet HMRC’s strict legal definition, and buyers can be left footing the bill when the claim fails.
Real Case Study: “Joe” Pays the Price
One homebuyer, referred to as Joe, bought a home in London for £1,100,000 and paid £53,750 in Stamp Duty. A tax repayment agent later contacted him, claiming the property was uninhabitable and that he was due a refund.
Joe agreed to let the agent submit the claim, which was accepted at first. HMRC repaid £9,250, but the agent took a 30% cut, leaving Joe with just £6,475. After reviewing the claim, HMRC decided it was invalid. Joe had to repay the full £9,250 refund, plus interest, and received a penalty, losing even more money in the end.
HMRC: Don’t Be Misled
The case serves as a warning that even if a claim is submitted by an agent, the legal responsibility falls on the taxpayer. Anthony Burke, HMRC’s Deputy Director for Compliance, said: “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 it’s wrong, they’ll be the ones left owing HMRC the money.”
Court Ruling Supports HMRC’s Position
In the case of Mudan & Anor v HMRC, the Court of Appeal confirmed that a property must be genuinely uninhabitable to qualify for SDLT relief. The ruling reinforced HMRC’s view that minor disrepair, like peeling paint, missing carpets, or dated fixtures, does not make a home unfit for living. It clarified that homes must be truly unsafe or legally uninhabitable to qualify for such refunds.
What Counts as “Uninhabitable”?
To qualify for relief, a property must have serious defects that make it unfit for human habitation. That could include:
- No bathroom or kitchen
- Serious structural issues
- Major fire or flood damage
- Dangerous electrics or gas
Issues like damp, broken tiles, or lack of furnishings don’t qualify. If you’re unsure, consult official HMRC SDLT guidance or a reputable tax adviser.
Conclusion
In a public warning, HMRC is advising homebuyers to beware of tax agents offering dubious Stamp Duty refund claims. A real-life case has shown how a buyer ended up repaying tax, interest, and penalties, despite trusting an agent.
With court rulings backing HMRC and tighter reviews underway, the advice is clear: check before you claim, or you could end up paying the price. Always consult official guidance or a trusted adviser, don’t rely on promises from agents chasing commission.
