In a recent ruling, HMRC has lost a case at the tax tribunal where the higher stamp duty rate was not payable. So what happened?
A couple purchased an uninhabitable property so completed the Stamp Duty return on the basis that they would only pay a stamp duty bill of £1,500. However, when HMRC received the return they increased the liability to £7,500. The couple appealed this decision.
A first-tier tribunal was held in Bristol in January and found that the couple bought the derelict property in Western-super-Mare with an intention to demolish the property and rebuild on the land, therefore, were not liable to pay the additional stamp duty.
HMRC argued that on the basis that the property was capable of being used as a dwelling at some point in the future they determined that the higher stamp duty charge was payable. The tribunal found that as the property was in such a dilapidated state and not suitable for use as a dwelling the higher stamp duty rate would not apply. It helped matters as the property had the presence of asbestos and its current state.
This leads to the opportunity for those buying properties that are uninhabitable to be exempt from the higher rate stamp duty charge. It is important to note that where HMRC think that this would not be the case they will look at changing the charge. However, you can appeal if you believe that there is a reasonable case for it not to apply.
July 4th, 2019