Second Property Stamp Duty Claim Refused

Digger3000

Hi,

I'm hoping someone can help me.

I bought a property with an ex partner, it was her second property (as we were waiting for her flat to sell) and I sold mine as part of the buying process. Given it was her second property, we had to pay second property stamp duty. I covered the cost of that. 

Our relationship subsequently broke down and the flat was never sold due to cladding concerns amongst other things. I bought her out of her share in the new property. During the process of buying her out, HMRC's SDLT helpline and my solicitor told me there would be no problem claiming the 2nd property stamp duty back. 

However, on requesting the money back HMRC sent a letter stating that they wouldn't refund the additional SDLT paid, citing the fact that my ex-partner hadn't sold her flat. I have never personally owned two properties at the same time and moved from my original main residence to my new main residence. My ex-girlfriend was on the title deeds for her flat and the new property for a short period of time but she is no longer on the title deeds for the new property. 

It seems that despite her name being no longer listed on the title deeds, the only way I can claim the second property stamp duty, is if she sells her flat, which feels like it is no longer relevant. As I understand it, the additional SDLT rules were put in place to target people owning multiple properties, but in this situation neither party have an interest in a second property. 

Any advice on how I might proceed to claim the money back would be appreciated. My solicitor has run out of steam and HRMC don't want to budge with multiple letters sent back and forth between the two.

Many thanks

MattMattMattUK

Digger3000 said:

Hi,

I'm hoping someone can help me.

I bought a property with an ex partner, it was her second property (as we were waiting for her flat to sell) and I sold mine as part of the buying process. Given it was her second property, we had to pay second property stamp duty. I covered the cost of that. 

Our relationship subsequently broke down and the flat was never sold due to cladding concerns amongst other things. I bought her out of her share in the new property. During the process of buying her out, HMRC's SDLT helpline and my solicitor told me there would be no problem claiming the 2nd property stamp duty back. 

However, on requesting the money back HMRC sent a letter stating that they wouldn't refund the additional SDLT paid, citing the fact that my ex-partner hadn't sold her flat. I have never personally owned two properties at the same time and moved from my original main residence to my new main residence. My ex-girlfriend was on the title deeds for her flat and the new property for a short period of time but she is no longer on the title deeds for the new property. 

It seems that despite her name being no longer listed on the title deeds, the only way I can claim the second property stamp duty, is if she sells her flat, which feels like it is no longer relevant. As I understand it, the additional SDLT rules were put in place to target people owning multiple properties, but in this situation neither party have an interest in a second property. 

Any advice on how I might proceed to claim the money back would be appreciated. My solicitor has run out of steam and HRMC don't want to budge with multiple letters sent back and forth between the two.

Many thanks

From my understanding I do not think you are entitled to the refund. At the point you bought the new flat jointly with your partner second property stamp duty was due because one of the purchasers owned another property so it was correct that the higher rate of SDLT applied. After that you subsequently purchased the remaining share of the new flat, but that was a separate transaction to the first and the higher rate SDLT still applies to the first. I think HMRC have this right. 

Digger3000

Thanks for the fast reply MattMattMattUK,

Thought I’d just double check as I think my first explanation perhaps wasn’t very clear.

So the situation was

My ex owned Flat A
I owned Property B

I sold Property B
We jointly bought Property C 
And paid full stamp duty plus second property stamp duty - as she had not sold Flat A

Flat A didn’t sell 
And I subsequently bought out my exs share in Property C

net result
I now fully own Property C 
Ex moved back into Flat A

Both parties own a single property.

I agree that second property stamp duty was correctly applied at the point of purchase of Property C. 

HMRC’s perspective is that a claim back of second property stamp will only be possible when Flat A is sold, but I feel a claim should be possible at the point I took full ownership of Property C. As she has disposed of all interest in the property already and Flat A doesn’t have any bearing on the situation. 

Any thoughts greatly appreciated!

[Deleted User]

It seems HMRC is saying that because property A was still owned when property C was bought repayment of the additional SDLT relating to that purchase would be contingent on the sale of property A within a specified time.

If so, my understanding is that is correct and there are no grounds to claim a repayment unless property A is sold within three years of the purchase of property C. 

As a solicitor has corresponded with HMRC I would expect that the legal basis for their decision to refuse the repayment claim has been explained along with any right of appeal against their decision. 

If not, I would advise that a formal decision outlining the legislation HMRC relies upon along with any right of appeal is requested.

The solicitor can then review the position and advise on how to proceed.