SDLT relief for multiple dwellings

SDLT_Geek

HeMan321 wrote: »

I really don’t know what to do from here…

I wonder what has happened on this one? The problem you are up against is that SDLT is a self assessed tax. As HMRC say on their sheet "Amendments, refunds and requests for advice after an SDLT return has been submitted":
"the relevant taxpayer is responsible for making sure they work out and declare the right amount of tax on their SDLT return".

Talking of the position after a return has been submitted they say:
"We can't carry out compliance checks simply because the taxpayer or their agent wants us to confirm that the tax they declared is correct. So unless we decide to carry out a compliance test we can't:
give advice
give opinions on the tax treatment of a transaction
confirm that the return we've received is right"

That puts a heavy burden of responsibility on the taxpayer who wants to claim multiple dwellings relief either on the original return or by claiming a refund after. Just by sending HMRC information with the application for a refund does not make HMRC the "judge" of whether the relief is due. That remains the taxpayer's responsibility. HMRC operate a "process now / check later" policy, which seems to have applied to you here.

Carrie_bie

I'm rather intrigued as to what happened with the above stories.... we're currently in the process of buying a property with two dwellings and are trying to find our way about the self assessment without having to pay any experts to tell us what we can figure out ourselves!

Some of the posts above have been really eye-opening as to what we're potentially dealing with, especially the HRMC approach of "process now / check later".

We're currently intending to claiming MDR at the lower rate. Our situation is buying an old 6 bed house with an outbuilding in the garden that has been converted to a 1 bed detached property.
Our solicitor wrote to HMRC explaining the situation and they responded saying that it looks fine, but we have to ensure that, after a just and reasonable apportionment, the subsidary dwelling (i.e. the outbuilding) is worth no more than a third of the value of the total transaction . This is where we're coming a bit unstuck because how do you prove the value of something that has never been sold?!

The surveyor who valued it for the mortgage lender doesn't even make comment on the outbuildings existing, let alone suggesting a separate value for each of them. The surveyor we commissioned ourselves does not provide market valuations and we didn't expect him to do so. I've done some local market research to find properties comparable to the outbuilding and the evidence is fairly supportive. However, there's nothing directly comparable... the outbuilding has no designated garden or parking, it needs modernisation and is only accessible through the grounds of the main house! Funnily enough, there aren't many other buildings on the market like that!

I've done free online valuations of both "dwellings", which have come back supporting the less than a 1/3rd valuation. I've also done some calculations on the price per sq. ft. which also supports the less than a 1/3rd valuation. We've had a re-build cost survey done for our buildings insurance which has given a re-build cost for each building, though I'm not sure how relevant this is to the market value?!

I suppose my question to the MSErs is what kind of evidence have you provided when claiming MDR, and whether you think what I have will be enough for HMRC?

DavidKaren

OK, so given the clarification now posted by OP, yes I agree the subsidiary dwelling rule appears to be met "2.10B In certain cases a purchase of more than one dwelling will be treated the same as if a single dwelling had been purchased. This is the case if any of the dwellings purchased are subsidiary dwellings. A subsidiary dwelling must be within the same building as or in the grounds of another dwelling purchased in the same transaction (the principal dwelling). The principal dwelling and the garden and grounds attributable to that principal dwelling must be at least two thirds of the value of the land purchased in the transaction"

Hi all, first post here just hoping for some clarification. —— anyone know if the bold underlined statement above is still in force? If so, who gets to decide which bits of the property are attributable to the main residence?

just about to move in with the M-i-L, into a 500k property with a separately accessed annexe whose floorplan is borderline 2/3:1/3. (Hence allocating more grounds to the main dwelling may help)

It will be a single txn, and my understanding from what I read is that SDLT will be £5k (calculated as 2x £250k dwellings using the MDR scheme @£2.5k each, which also happens to hit the 1% rule). 

Briefly spoke to a sdlt accountant who scared me with figures of £20k, but admittedly he didn’t ask for the property/value split. Might be cynical, but maybe just wants his fee to sound more reasonable if he appears to “save” me £15k?

Thanks for any input