The warning comes after a recent spate of Stamp Duty refund claims to HMRC failed to meet specific criteria.
The agents have been known to call new property owners after finding them through Land Registry records and property search websites, promising money back on ‘unknowingly overpaid’ SDLT.
Recent analysis undertaken by HMRC suggests that up to a third of claims for ‘multiple dwelling relief’ refunds were incorrect.
HMRC then raises enquiries on these claims, but sometimes that is after the agent has taken their fee, leaving the homeowner to pick up the difference.
Incorrect refund claims must be repaid with interest, with some potentially facing penalties as well.
Recent examples
HMRC has issued some recent examples including:
- A letter from a rogue agent suggested a homeowner may have overpaid £60,000 worth of Stamp Duty. The agent claimed the home could be designated as two properties, despite it clearly being one.
- A claim that a bedroom could be a separate dwelling and in line for claiming ‘multiple dwellings relief’ because it had an en-suite and a built-in wardrobe which could be a kitchen if you added a microwave and a kettle.
- An individual who claimed their house was not wholly residential because a paddock behind the garden was used occasionally to keep a neighbour’s horse. The agent advised that they were due lower stamp duty rates because the presence of the paddock made the transaction a mix of residential and non-residential property, which would incur a lower Stamp Duty payment.
- A new owner of a six-bedroom house claimed it was not a wholly residential property because a room above a detached garage was used as an office.
But new homeowners are not the only ones at risk
However, new homeowners are not the only ones being targeted by such tax claim companies. In some cases social media adverts about claiming tax relief from commercial tax refund companies are being mistaken for HMRC communications.
Also, simply using an online calculator, expressing an interest, or entering your email address can be enough to sign you up to a tax refund company’s services and trigger an ‘assignment’ issue, which we discuss further below.
We say
There are plenty of companies who offer to make tax relief claims for you where they take a fee from any repayment you get under a ‘no win, no fee’ type arrangement.
Whilst there are some claims companies who make accurate claims with transparent fees and processes, there are many others who are less scrupulous.
In particular, you must be careful about online enquiry and application forms these claims companies use, which ask you to sign something online or tick a box to accept terms and conditions. These can be used to create a legal ‘deed of assignment’. This assigns all your tax refunds for a particular period (not just the one that you are using them for) to the tax refund company! A legal assignment cannot be changed or revoked by you alone. This means that other refunds, which are often larger and more valuable that the original refund applied for, can get sent to the tax refund company. They then deduct their fee on them, even though they haven’t done any work towards them.
As already mentioned, you are also liable for HMRC enquiries raised against your claim which can result in repayment, interest and penalty fines. So, you should always consider – if it sounds too good to be true, it probably is.
Anyone approached about a Stamp Duty refund claim should check with their original conveyancer, take professional advice from their tax advisor and check HMRC’s guidance by searching ‘Stamp Duty Land Tax’ on GOV.UK. You can also contact their helpline on 0300 2003 510.
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