Warning over new Stamp Duty refund scam that could cost you £1,000s – signs to look out for

BUDDING buyers have been warned over Stamp Duty refund scams that could see you lose thousands of pounds.

HMRC has warned that bogus tax agents are preying on buyers, promising to win them back stamp duty payments they’ve made. 

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Tax agents are claiming that they can win back refunds on your behalf if you have bought a property which needs repair work.

But the taxman has warned that these claims are not valid, and you could be on the hook for the full stamp duty bill, plus penalties and interest – which could cost you thousands of pounds.

Anthony Burke, HMRC’s deputy director of Compliance Assets, said: “Homebuyers should be cautious of allowing someone to make a Stamp Duty Land Tax repayment claim on their behalf.

“If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.”

Stamp Duty is a lump sum you have to pay to the taxman when you buy a property worth over a certain price.

What you pay depends on the type of property you’re purchasing, how much it’s worth, and what type of buyer you are.

You don’t pay anything for properties under £300,000 if you’re a first-time buyer, but for existing homeowners the threshold is lower at £125,000.

So if you were a first-time buyer buying a £350,000 property, you would pay £2,500, but if you were buying your next home, you would pay £7,500.

However, fall prey to a bogus repayment agent and you could end up forking out thousands of pounds more than you should have.

As an example, someone buying a second home in London for £1,100,000 would pay £53,750 stamp duty.

If that home needed modernisation and repair, such as a a new boiler and rewiring, this could stop that person moving in straight away.

A home in this situation is classed by HMRC as residential as it is still deemed a dwelling.

However, the homeowner could be targeted by a repayment agent falsely claiming they can reclaim overpaid stamp duty because the home is classed as non-residential, meaning they should have paid less of the land tax.

They may then decide to go ahead and pay the agent to make a claim on their behalf and receive a payment.

But, later in the year, HMRC would open a compliance check into the repayment claim and conclude that the property was residential. 

This would lead to the homeowner finding out they owed stamp duty to the tax man plus interest and a penalty.

If the amount the person got back from the stamp duty refund was £9,250 and the agent charged a 30% fee, the refund would be £6,475.

However, the refund owed to HMRC would be worth £9,250, plus any added penalties and fees, costing them thousands of pounds.

The decision to class homes that need repairs as residential comes after a landmark Court of Appeal decision.

The decision backed up HMRC’s view that if a property needs repairs but is still suitable for use as a dwelling, residential SDLT needs to be paid on it.

In other news, we revealed how some people can end up paying stamp duty twice through a virtually unknown loophole.

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