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Stamp Duty Land Tax (SDLT) rebate fraud

Stamp Duty Land Tax (SDLT) is a tax that must be paid when you buy property in the UK. It is calculated as a percentage of the purchase price, and the amount of tax you pay depends on the value of the property and whether various reliefs are applicable, most commonly for first time buyers.

In recent years there has been an increase in tax repayment firms contacting new homeowners and suggesting they are entitled to a rebate as they have ‘unknowingly overpaid’ SDLT. Unfortunately, some of these agents are encouraging spurious claims or vastly exaggerating the applicability of the conditions which may prompt a rebate.

HMRC has recently launched a number of initiatives to crack down on this type of fraud. Officers are initiating criminal investigations into both the firms and the customers taking up their services.

How does SDLT rebate fraud work?

  • The new homeowner will receive a letter or cold call stating that they have ‘unknowingly overpaid’ SDLT on their recent purchase.
  • Often agents will suggest one of the following applies:
    1. There has been a misclassification of the property so that multiple dwelling relief should be applied for.
    2. The property is not wholly residential.
    3. The property is uninhabitable.
    4. The property has access to a communal garden so is a ‘mixed use’ property (this is not the case).
  • The agents then offer to make the application on the homeowners behalf on a ‘no win no fee’ type of arrangement.

What are the consequences of SDLT rebate fraud?

HMRC are increasingly investigating this type of fraud and where necessary conducting interviews under caution with both the agents and customers about regarding involvement in the rebate applications. If HMRC believe dishonesty has taken place they may commence a fraud prosecution which could lead to a fine or in serious cases a custodial sentence.

How can you avoid SDLT rebate fraud?

  • Think very carefully before allowing an agent to have a claim for a SDLT rebate on your behalf. If something sounds too good to be true, it usually is.
  • Be realistic about the applicability of the relief suggested by the agent to your property.
  • Consider contacting the conveyancer who dealt with your purchase and clarifying the position.

If you have been contacted by HMRC regarding a Stamp Duty Land Tax rebate criminal investigation, you should immediately seek legal advice, Richardson Lissack have a team of expert lawyers that can advise and represent you.

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