Overpaid SDLT?
Discussion
Received a letter through the post from a company called Relatus, a no win no fee type company, advising that we’ve overpaid SDLT when we moved into our new home in June.
Anyone ever come across them before?
It states that the property benefits from an annex or secondary accommodation, which it does as that’s where my MIL resides, and that the property is eligible for Multiple Dwelling Relief.
Is this really a thing? And if so, would I be better off completing the paperwork myself rather than paying someone 25% + VAT to do this for me?
Many thanks in advance!
Just came out the blue unexpectedly.
Anyone ever come across them before?
It states that the property benefits from an annex or secondary accommodation, which it does as that’s where my MIL resides, and that the property is eligible for Multiple Dwelling Relief.
Is this really a thing? And if so, would I be better off completing the paperwork myself rather than paying someone 25% + VAT to do this for me?
Many thanks in advance!
Just came out the blue unexpectedly.
MDR is real but be careful. It is not a given that you have overpaid or even that it would apply in your case.
We received similar letters after buying a house with what looked like a separate dwelling. I would speak to your own solicitor first to confirm that they took the potential for MDR into account when preparing the submission. If they didn't then ask them why not, if they did but filed without it then again ask them why (there will almost certainly be a reason), then ask them about the downsides of seeking MDR.
If you look at the Ts&Cs you were probably sent (or sent a link to) it could well be that if you want to explore MDR (and any potential downsides) using your own lawyers might well be a better option.
We received similar letters after buying a house with what looked like a separate dwelling. I would speak to your own solicitor first to confirm that they took the potential for MDR into account when preparing the submission. If they didn't then ask them why not, if they did but filed without it then again ask them why (there will almost certainly be a reason), then ask them about the downsides of seeking MDR.
If you look at the Ts&Cs you were probably sent (or sent a link to) it could well be that if you want to explore MDR (and any potential downsides) using your own lawyers might well be a better option.
Yes, it is a thing. HMRC will normally look for a number of factors in determining whether they agree that there are multiple dwellings such as
independent entrances that do not require any access to the 'other' property
separate utility meters
separate council tax records
etc
it is not black and white, but it is these sort of items that would be considered.
You need to claim any potential refund within 12 months. The solicitor / conveyencer you used for the purchase should be your first port of call I suggest.
independent entrances that do not require any access to the 'other' property
separate utility meters
separate council tax records
etc
it is not black and white, but it is these sort of items that would be considered.
You need to claim any potential refund within 12 months. The solicitor / conveyencer you used for the purchase should be your first port of call I suggest.
Thank you both. Honestly, I’ve never even heard of it before today so I’ve pinged our solicitor an email asking him about it.
As he’s an old school friend of my wife’s I’d be surprised if it was overlooked so there may be a reason why it wasn’t applied for. Again, I’ve no idea what that might be either though!
As he’s an old school friend of my wife’s I’d be surprised if it was overlooked so there may be a reason why it wasn’t applied for. Again, I’ve no idea what that might be either though!
andy43 said:
The possibility of creating a second council tax charge would be what I’d be thinking about… no idea if it would be triggered by what you’re suggesting but it’s worth a good looking at.
Yeah, that would be less than ideal. We’d end up paying more in the long run then we’d claw back now if that were the case. I’ll see what our solicitor says and go from there. Thank you all.
Fortunately we moved in June so paid a lot less SDLT anyway.
We could in theory try to claim back £8K but we’d probably end up with an additional council tax bill that would cost more than that over the next 5 years anyway so it turns out that it’s not worthwhile for us.
Thanks all for the input though. My wife would have killed me if it was worthwhile and I’d not done anything about it!
We could in theory try to claim back £8K but we’d probably end up with an additional council tax bill that would cost more than that over the next 5 years anyway so it turns out that it’s not worthwhile for us.
Thanks all for the input though. My wife would have killed me if it was worthwhile and I’d not done anything about it!
CharlesElliott said:
Yes, it is a thing. HMRC will normally look for a number of factors in determining whether they agree that there are multiple dwellings such as
independent entrances that do not require any access to the 'other' property
separate utility meters
separate council tax records
etc
it is not black and white, but it is these sort of items that would be considered.
You need to claim any potential refund within 12 months. The solicitor / conveyencer you used for the purchase should be your first port of call I suggest.
We successfully claimed this back in 2015 after being approached by a law firm who I think were the first to spot this. Don’t know if the rules have changed but the following were neededindependent entrances that do not require any access to the 'other' property
separate utility meters
separate council tax records
etc
it is not black and white, but it is these sort of items that would be considered.
You need to claim any potential refund within 12 months. The solicitor / conveyencer you used for the purchase should be your first port of call I suggest.
- Separate door/dwelling. Not connecting internally
- Has its own bathroom and a kitchen
Our annex didn’t have separate utility meters or a council tax bill so maybe that is new.
There are no 'rules' as such, it is whether HMRC can successfully claim it is not a separate dwelling if they end up taking it to a tribunal. There are various factors that would be in one side or others favour. Anyone can 'tell' HMRC that they have multiple dwellings and in many cases HMRC may accept it, but that doesn't mean they won't choose to investigate subsequently.
This is what the HMRC manual says about miltiple dwellings:
Facilities
Sleeping Area – A dwelling would be expected to have an area available for sleeping. A room to sleep would normally have lighting, power points, and a window and be of a reasonable size. It will normally be separated from a ‘living area.’
Living Area – A dwelling would be expected to have a suitable area for day-to-day living, including space for chairs, tables, cupboards, furniture and to have visitors. The room would normally have lighting, power points, heating and a window.
Bathroom – It would be essential for a dwelling to have its own washing and toilet facilities, which would usually include a bath or shower, a toilet and sink.
Kitchen – A dwelling would be expected to have an area where a meal can be prepared and somewhere suitable to eat it (not necessarily in the same place). It is not necessary for a kitchen to have a cooker or white goods such as a fridge or dishwater present at the effective date of the transaction, because these are sometimes removed on a house sale. However, there should be space and infrastructure in place e.g. plumbing for sink, power source for cooker etc.
Accommodation such as studio flats, which may combine two or more areas into one room, would meet the requirements.
Independent Entrances
It is important that each dwelling has sufficiently independent access. This could be a separate entrance from the outside of the building, or from common parts of the building such as in the case of flats. Typically, there will be common parts (such as hallways and staircases) which each dwelling will have access to via a lockable door.
HMRC would not normally consider the hallway or living accommodation of the main house as a common area. For example, an upstairs flat may appear sufficiently independent on its own. But if access to it is through the downstairs accommodation, then the lack of privacy/separation for the downstairs area is likely to mean that there is only a single dwelling.
Privacy and interconnecting doors
A single dwelling requires a degree of privacy from other dwellings. It is unusual, but possible, for adjoining dwellings to have interconnecting doors. It is relevant whether the door between the parts can be locked, or is readily capable of being made secure from both sides.
The more interconnecting doors that there are between “units” the less likely they could be reasonably considered to be separate single dwellings. The type of door is also important to consider e.g. whether the door has adequate fire proofing and sound proofing to be considered suitable to separate the dwellings.
Control of Utilities
A single dwelling should be able to control all or most of the utility services supplied to it.
Electricity – Dwellings should have an electricity supply which can be switched on and off from its own consumer unit, within the dwelling or a communal area.
Cold Water – Dwellings require a supply of water fit for human consumption/use. The water supply should be able to be turned off from its own stop tap, accessible from within the dwelling or in a communal area.
Heating – Dwellings will normally have their own independent system(s) for heating, although supplies may occasionally be shared, perhaps by way of a renewable energy scheme. A dwelling would be expected to be able to manage and turn their own heating system on or off (for example whilst works are done) without having to go through another dwelling.
Gas – Where a dwelling has a gas supply, they should be able to isolate it from within their property or from a shared area.
Where a property has a physical configuration which suggests it might be considered two dwellings (“main property” and “annex”) but very few or no utilities can be controlled by the annex-dwellers without needing to enter another dwelling to do so, it is likely that the “annex” should not be considered a single dwelling in its own right.
Other Factors
Included but not limited to:
Legal Constraints – The property may be subject to legal conditions, including planning restrictions and restrictive covenants, whether public or private law, which inhibit use as a separate dwelling. These conditions will be a factor in considering suitability of use as a dwelling, although where these conditions are not being respected for any reason, actual use will prove more helpful than theoretical use.
Council Tax – Where a property has been assessed for council tax purpose as comprising more than one dwelling, this is an indicator that for SDLT purposes there also may be more than one dwelling. However, the definition of dwelling for council tax purposes is different from that of Stamp Duty Land Tax, and hence this factor will not be a strong indicator on its own.
Marketing Material - Estate agents marketing material is a useful tool to assist in consideration of how many dwellings a property might comprise. However, an estate agents’ main objective is in selling the property, not in providing legislatively accurate definitions of dwellings, so this information is not determinative.
Separate post and bills – Individual letter boxes, utility bills and phone bills will all provide some evidence of separate dwellings, but a lack of them will not be a deciding factor to determine that there aren’t separate single dwellings.
Facilities
Sleeping Area – A dwelling would be expected to have an area available for sleeping. A room to sleep would normally have lighting, power points, and a window and be of a reasonable size. It will normally be separated from a ‘living area.’
Living Area – A dwelling would be expected to have a suitable area for day-to-day living, including space for chairs, tables, cupboards, furniture and to have visitors. The room would normally have lighting, power points, heating and a window.
Bathroom – It would be essential for a dwelling to have its own washing and toilet facilities, which would usually include a bath or shower, a toilet and sink.
Kitchen – A dwelling would be expected to have an area where a meal can be prepared and somewhere suitable to eat it (not necessarily in the same place). It is not necessary for a kitchen to have a cooker or white goods such as a fridge or dishwater present at the effective date of the transaction, because these are sometimes removed on a house sale. However, there should be space and infrastructure in place e.g. plumbing for sink, power source for cooker etc.
Accommodation such as studio flats, which may combine two or more areas into one room, would meet the requirements.
Independent Entrances
It is important that each dwelling has sufficiently independent access. This could be a separate entrance from the outside of the building, or from common parts of the building such as in the case of flats. Typically, there will be common parts (such as hallways and staircases) which each dwelling will have access to via a lockable door.
HMRC would not normally consider the hallway or living accommodation of the main house as a common area. For example, an upstairs flat may appear sufficiently independent on its own. But if access to it is through the downstairs accommodation, then the lack of privacy/separation for the downstairs area is likely to mean that there is only a single dwelling.
Privacy and interconnecting doors
A single dwelling requires a degree of privacy from other dwellings. It is unusual, but possible, for adjoining dwellings to have interconnecting doors. It is relevant whether the door between the parts can be locked, or is readily capable of being made secure from both sides.
The more interconnecting doors that there are between “units” the less likely they could be reasonably considered to be separate single dwellings. The type of door is also important to consider e.g. whether the door has adequate fire proofing and sound proofing to be considered suitable to separate the dwellings.
Control of Utilities
A single dwelling should be able to control all or most of the utility services supplied to it.
Electricity – Dwellings should have an electricity supply which can be switched on and off from its own consumer unit, within the dwelling or a communal area.
Cold Water – Dwellings require a supply of water fit for human consumption/use. The water supply should be able to be turned off from its own stop tap, accessible from within the dwelling or in a communal area.
Heating – Dwellings will normally have their own independent system(s) for heating, although supplies may occasionally be shared, perhaps by way of a renewable energy scheme. A dwelling would be expected to be able to manage and turn their own heating system on or off (for example whilst works are done) without having to go through another dwelling.
Gas – Where a dwelling has a gas supply, they should be able to isolate it from within their property or from a shared area.
Where a property has a physical configuration which suggests it might be considered two dwellings (“main property” and “annex”) but very few or no utilities can be controlled by the annex-dwellers without needing to enter another dwelling to do so, it is likely that the “annex” should not be considered a single dwelling in its own right.
Other Factors
Included but not limited to:
Legal Constraints – The property may be subject to legal conditions, including planning restrictions and restrictive covenants, whether public or private law, which inhibit use as a separate dwelling. These conditions will be a factor in considering suitability of use as a dwelling, although where these conditions are not being respected for any reason, actual use will prove more helpful than theoretical use.
Council Tax – Where a property has been assessed for council tax purpose as comprising more than one dwelling, this is an indicator that for SDLT purposes there also may be more than one dwelling. However, the definition of dwelling for council tax purposes is different from that of Stamp Duty Land Tax, and hence this factor will not be a strong indicator on its own.
Marketing Material - Estate agents marketing material is a useful tool to assist in consideration of how many dwellings a property might comprise. However, an estate agents’ main objective is in selling the property, not in providing legislatively accurate definitions of dwellings, so this information is not determinative.
Separate post and bills – Individual letter boxes, utility bills and phone bills will all provide some evidence of separate dwellings, but a lack of them will not be a deciding factor to determine that there aren’t separate single dwellings.
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