Stamp Duty Refund

AnotherVMLetDown

Dear MSE Forum,

Stamp duty Refund Help.

I purchased my property with my then partner in November 2021, as we were getting divorced I needed his help to purchase the new property. In November 2021 my partner removed my name from our family home which we agreed. I then removed my partner’s name from the new house in May 2022, so we then became fully independent of each other. 

Due to buying in joint names and the existing property, we paid the higher rate of stamp duty

Our plan was that we would get a refund and we believed we had 3 years to do so when we could show that separation was permeant. We waited for our divorce to come through which happened last month. We then applied for the refund when we could provide the correct documents and have now been told by HMRC that:

under SCHEDULE 4ZA of the finance act that although we meet all the criteria under section 3(7) but we are out of time due to this below

(a)be made within the period of 12 months beginning with the effective date of the transaction disposing of the major interest in the sold dwelling, and(b)be made in such form and manner, and contain such information, as may be specified by HMRC.

researching the law online the above only applies to 3(7)(A)(b) when under 3(7)(A)(a) it clearly says we have 3 years to claim back the funds.

(7A)For the purposes of sub-paragraph (7)(b), the permitted periods are—(a)the period of three years beginning with the day after the effective date of the transaction concerned, or(b)if HMRC are satisfied that the purchaser or the purchaser's spouse or civil partner would have disposed of the major interest in the sold dwelling within that three year period but was prevented from doing so by exceptional circumstances that could not reasonably have been foreseen, such longer period as HMRC may allow in response to an application made in accordance with sub-paragraph (7B).

I cant understand why they have refused and if we have any grounds to claim, have the interpreted it incorrectly? do we have any recourse? why have they not applied 7(A)(a)

Any help would be greatly received. 

GrumpyDil

On reading just that snippet it does look odd but without the full section I'm not going to say anymore but @SDLT_Geek might be able to comment. 

SDLT_Geek

AnotherVMLetDown said:

Dear MSE Forum,

Stamp duty Refund Help.

I purchased my property with my then partner in November 2021, as we were getting divorced I needed his help to purchase the new property. In November 2021 my partner removed my name from our family home which we agreed. I then removed my partner’s name from the new house in May 2022, so we then became fully independent of each other. 

Due to buying in joint names and the existing property, we paid the higher rate of stamp duty

Our plan was that we would get a refund and we believed we had 3 years to do so when we could show that separation was permeant. We waited for our divorce to come through which happened last month. We then applied for the refund when we could provide the correct documents and have now been told by HMRC that:

under SCHEDULE 4ZA of the finance act that although we meet all the criteria under section 3(7) but we are out of time due to this below

(a)be made within the period of 12 months beginning with the effective date of the transaction disposing of the major interest in the sold dwelling, and

(b)be made in such form and manner, and contain such information, as may be specified by HMRC.

researching the law online the above only applies to 3(7)(A)(b) when under 3(7)(A)(a) it clearly says we have 3 years to claim back the funds.

(7A)For the purposes of sub-paragraph (7)(b), the permitted periods are—

(a)the period of three years beginning with the day after the effective date of the transaction concerned, or

(b)if HMRC are satisfied that the purchaser or the purchaser's spouse or civil partner would have disposed of the major interest in the sold dwelling within that three year period but was prevented from doing so by exceptional circumstances that could not reasonably have been foreseen, such longer period as HMRC may allow in response to an application made in accordance with sub-paragraph (7B).

I cant understand why they have refused and if we have any grounds to claim, have the interpreted it incorrectly? do we have any recourse? why have they not applied 7(A)(a)

Any help would be greatly received. 

You will not like this answer.  There are two bits of bad news.

Time limit to make a claim

You have focussed on the time limits within FA03/Sch4ZA/para3(7) and 3(7A) within which the "sold dwelling" has to be disposed of (usually within three years of the "purchased dwelling" having been acquired).

But there is a separate time limit (having made the disposal of the "sold dwelling") to amend the return and make the claim.  This is set out in FA03/Sch4ZA/para8(3).  As HMRC say, there is only 12 months to make the claim once you have disposed of the "sold dwelling".

It gets worse

I do not believe you were ever entitled to the refund anyway.  You say your partner was a joint purchaser with you of your new home.  But he never intended to live there. 

So you did not both meet the conditions for a refund (he never intended to live in your new home as his only or main residence).

AnotherVMLetDown

Thanks for the quick and clear response.

The outcome is a bit of a shame, but can’t be helped, and it is useful to know where we stand.