Stamp duty errors harming the property market

Errors made in assessing Stamp Duty Land Tax (SDLT) on property purchases are actively harming the market and may be hampering investment in the industry, according to Cornerstone Tax.

The tax adviser suggested that if anyone had recently bought a property, unless they took the advice of a specialist adviser on their SDLT liability, they may have overpaid on Stamp Duty by thousands of pounds.

Cornerstone highlighted an example of one of its property development firm clients o based in Birmingham that had purchased a large property for £1,415,000. At the time of completion, the land had benefitted from planning permission to make structural alterations, and the tax adviser suggested the aim of these was to construct nine residential dwellings, with office space on the lower floors.

When instructed to evaluate the client’s portfolio, Cornerstone identified that the site had been misclassified at the time of purchase, and that Multiple Dwellings Relief was available at the time of completion. As a result, they submitted a claim to amend the SDLT return to HMRC on 24 February 2020 and within a month, HMRC had agreed with the assessment and issued a refund for £34,590.93.

Founder and principal consultant of Cornerstone, David Hannah, handled the case and said: “Simple mistakes like these have a huge impact on the industry and the wider economy. We have seen countless such examples over the last few years and yet the problem stills persists.

“At a time when we need to be looking at the rebuilding of industries currently crippled by the worldwide health crisis, it’s more vital than ever that matters like these are handled right first time, every time.

“Confidence in the market is hugely important at a time when the numbers of transactions are taking such a hit due to the lockdown. Knowing that the SDLT you are going to pay on your property is accurate could be the difference between buying a house or not and we should be doing all we can to encourage the market back onto its feet.”

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