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House-keeping for Stamp Duty

Ideas to generate and save cash and improve liquidity.

Reclaims

Stamp Duty has become very complex, even for tax generalists. As a result, it may have been overpaid on seemingly straightforward deals over the last four years.

In our experience, it is therefore worth checking whether you have overpaid Stamp Duty on the following:

  • mixed-use build-to-rent schemes by paying tax at the residential higher rates
  • dilapidated dwellings by paying tax at the residential rates
  • dwellings with annexes by failing to claim multiple dwellings relief
  • dwellings with commercial or agricultural use on grounds by paying tax at the residential rates
  • student accommodation, assisted living and apart-hotels by paying tax at the non-residential rates
  • collective enfranchisement transactions by paying tax at the residential rates.

In some cases, the amount of Stamp Duty overpaid is material. Making an ‘in-time’ statutory reclaim is far easier, cheaper and more likely to be successful than bringing a professional negligence claim.

Review

The scope of the Stamp Duty general anti-avoidance rule is uncertain. Regrettably, HM Revenue & Customs (HMRC) argue, and in 2019 the First-tier Tribunal found, that it is an anti-tax saving rule, rather than an anti-avoidance rule. This means that arrangements, however responsible in design, are vulnerable to challenge if carried out bilaterally.

For property that may be sold in the short- to medium-term, we would recommend reviewing the holding structures to ensure they are as tax-efficient, administratively simple to run, and attractive on exit as possible. Restructuring unilaterally (i.e. in advance of a sale) offers more choice and a safer outcome.