31
March
2020
March
2020
Following an unprecedented stamp duty land tax case last year, Primas is continuing to work on behalf of property owners and landlords who unknowingly overpaid on stamp duty.
Primas’ most recent case saw its client receive a £19,000 rebate in overpaid stamp duty, culminating in over £100,000 being reclaimed on behalf of clients since the landmark tribunal.
As most experienced property developers and landlords will know, a Stamp Duty Land Tax (or ‘SDLT’) surcharge applies to purchases of additional dwellings.
The topic has been under close scrutiny as part of a landmark tax tribunal case between P N Bewley Ltd and HMRC. Now complete, this case opened up some incredibly interesting outcomes for property developers and landlords, including many we support at Primas.
The case determined that properties not immediately habitable at the time of completion will not constitute as a “dwelling” for the purpose of the Finance Act 2003. The judgement had important ramifications, as it meant P N Bewley was not liable to pay the additional three per cent ‘second home surcharge’.
The outcome of this case, in particular, has some potentially far-reaching consequences. And this is important for us because, at Primas, we have been instructed to act for a number of landlords and developers to recover stamp duty paid on properties which shouldn’t have attracted the additional tax.
The Facts
To provide some context to this particular case, the property that P N Bewley purchased was a bungalow and a plot of land in Western-super-Mare.
The bungalow was essentially a derelict building that had been unoccupied for around three years. Members of the tribunal were provided photographs of the derelict building, demonstrating that the heating system, radiators, floorboards and pipework had been removed and that the property – both internally and externally – was in a very poor condition. The tribunal members were also provided with reports from surveyors that concluded asbestos was present in the property and urgently needed removing.
On presentation of P N Bewley’s evidence, the tribunal (rather brazenly I might add) concluded there was “no doubt a passing tramp or group of squatters could have lived in the bungalow… we have no hesitation that, in this case, the bungalow was not suitable for use as a dwelling.”
In this instance, as a result of the findings, P N Bewley was not required to pay the SDLT surcharge.
The case highlighted the importance of developers, estate agents and conveyancers fully understanding the condition of a property, and what potential benefits this offers to a purchaser.
It also highlighted that developers and landlords who have paid an inappropriate level of tax may be able to seek to reclaim, if circumstances permit.
On the back of the case, we’re continuing to reclaim thousands of pounds in overpaid SDLT and working with lots of property developers and landlords to help them better understand the risks and opportunities.
