SDLT relief for multiple dwellings

steven239

Hi all

Thought I would add my tuppence worth for anyone it may help. I've personally claimed MDR on 3 different occasions. 2 as historical refunds. (I'm not an accountant or solicitor).

From my experience, HMRC aren't wholly interested in variables such as separate entrances, separate utilities, separate council taxes, separate leases or not, planning permissions etc. Although ticking a few of these help, fundamentally as long as you can offer a reasonable explanation as to why you believe that MDR should apply then they're unlikely to question it.

While I have had no problems claiming MDR, I have always been charged the higher rate.

In my most recent case, I bought a freehold house that was arranged as 3 flats (ie no separate leases). I used MDR and paid at the higher rate on each 'average third'. On the day of purchase one of the flats was to become my main residence. So I asked HMRC if I could apply MRR (main residence relief) to the one flat (ie one third of the MDR amount) or possibly to all 3 flats. In other words I was asking if I could apply MDR but with the normal rate like in the good old days before the higher rates.

The written response, received this month (Feb 18) was a resounding no. The reason given quotes the paragraph as mentioned earlier in the thread : "If two or more dwellings are purchased in the same transaction and at least two of them are worth £40,000 or more and are not reversionary on a lease with more than 21 years to expiry then the transaction will be a higher rates transaction. This is irrespective of whether the individual owns an interest in another dwelling at the end of the day or whether one of the purchased dwellings replaces a main residence."

So I think it is impossible to claim MDR at a normal rate in any circumstance. So obviously you would want to consider if simply claiming Main Residence on the whole at the normal rate is not cheaper than claiming MDR at the higher rate.

Finally as mentioned before ... it's tax planning not avoidance. I question/challenge HMRC all the time; as long as you give full disclosure and don't bend the facts to suit you then it is entirely appropriate that you should be using the available reliefs; you're not saving or avoiding tax, you're simply paying the correct amount.

The guys on the phone in Wales quite often given contradictory advice and opinions, but they are worth a preliminary chat nonetheless. Ultimately you need to submit your claim in writing to the Birmingham office and then wait and wait and wait and ......

SDLT_Geek

steven239 wrote: »

So I think it is impossible to claim MDR at a normal rate in any circumstance. So obviously you would want to consider if simply claiming Main Residence on the whole at the normal rate is not cheaper than claiming MDR at the higher rate.

In my view it is sometimes possible to have the best of both worlds: to benefit from multiple dwellings relief and not to have the 3% surcharge apply. This can sometimes be the case for instance where one dwelling counts as "subsidiary" to the other within the meaning of the SDLT rules.


In the case steven239 mentions (a freehold house arranged as three flats with him moving into one of them) it seems that the 3% surcharge would have applied whether or not MDR was claimed.

SDLT_Geek

HMRC have moved the guidance on the 3% surcharge from their pdf guidance note of November 2016 into their manual. They have not taken the opportunity to clarify the interaction between multiple dwellings relief and the higher rates of SDLT. There is very little of relevance to "granny flat" and annex cases in the page on the interaction: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09840 There is a meeting with them in early May as to how this section of the guidance can be improved, so perhaps something better will follow.

gemmz1983

Does anyone have any updates regarding this? HMRC have directed me to their technical queries - 40 day response time. My solicitor says it's too complex and we need an accountant who incidentally wants either £2,500 for the advice or 15% of the overall refund if successful! I am not willing to pay this at the moment, not because I don't appreciate the cost of advice and professionals, but I also sense being taken advantage of and would rather do this myself if i can.

Our situation is of purchasing a new main residence purchase (which will be paid initially at higher rate as we are currently trying to sell our house) and that the new residence has a coach house which incidentally council have written to sellers about banding separately for council tax. I feel like it's a clear cut case?

BMAH

Can anyone recommend a good SDLT specialist.

Thank you.

SDLT_Geek

There are a few SDLT specialists. You could try Marc Selby at Laytons who was mentioned in Sam Meadow's Telegraph article on Saturday.

phill99

£73k in stamp duty? There are parts of the country where you can still but a house for that!!

Mutton_Geoff

westy22 wrote: »

Did either Mutton Geoff or Dangerous48 get anywhere with these investigations and claims as I am interested in the outcome? Would be grateful for any updates. TIA

This has taken forever. I have been in contact with the HMRC helpline several times throughout the year and they repeatedly failed to meet their own deadlines.

I raised a formal complaint 10 days ago and today they called me to confirm that my case was approved a week ago and a cheque will be sent “imminently”. I asked how much and they confirmed £29,000 which is £28,750 SDLT refund and £250 interest due to their delays.

Although the cheque is not in my hands just yet, this does confirm that second property SDLT does not apply in some cases of multiple dwelling purchase (as in my case).

I reminded HMRC that if it were I that owed them £29k, I wouldn’t be able to delay payment by a year just because I was busy.


Edited to add, cheque arrived today. Took them almost a year from first approach to sort this out and four months since they confirmed they had all paperwork to hand and were "working on it".

ravseeruthun

Hi All

I saw your post on Multiple Dwellings Relief. I unfortunately have overpaid stamp duty but I am within one year of filling the return.

From the HMRC website it seems that to get a refund I have to send in a technical query in writing with the relevant paper copy of the filed return. Is that what you have done previously or is there a form I need to submit? I am also doing this without and accountant or Solicitor so any advice would be much appreciated.

Steven I hope you don’t mind but I also sent you a PM.

Thanks in advance.

Rav

HeMan321

Hello all, thought I would add my sorry story in case it helps anyone, or anyone can help me...
I bought a house and later became aware of MDR so I then spent months and months trying to get an answer out of HMRC if it would apply to my case. It was really frustrating as no one can answer a question on the phone, so they tell you to write and that takes months to get a reply and when it does come, you get a one-line reply that doesn’t answer your question! In the end I was advised to write a letter explaining the situation in all the detail I could and request the refund, so I did. Many months later, after many chasing phone calls, a cheque just turned up out of the blue!
I cashed it and thought it was a good result.
But then, many more months later, I received a letter saying they are reviewing my case and could I answer some questions for them. I duly answer the questions, provide all the same information that I originally did (so it’s not as if I disclosed anything different) and sent it off. And now, many more months later, they now say I have to pay it all back!
They say that because at the time of the purchase the annex didn’t have a working kitchen or toilet (previous owner drew up plans but never got around to fitting it) it does not count.
This is a significant sum of money we now have to find, so this puts me in a seriously awkward position! Not only does it seem wrong that I was relentless in trying to get them to confirm if my claim was valid in the first place and they paid it based on the information provided and now that same information apparently means I am not due but also the fact that just because the facilities were not fitted, even though we have architectural plans from the previous owner, it is not due!
Their official guidance says:
“For the purposes of the relief a “dwelling” means a building or part of a building which is suitable for use as a single dwelling or is in the process of being constructed or adapted for such use.”
Does having architectural plans drawn up constitute “in the process”?
I really don’t know what to do from here…