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Stamp Duty loopholes to be shut

The taxman has published a consultation to shut down Stamp Duty loopholes and put ‘claims farmers’ out of business, writes Stamp Duty Partner Sean Randall.

What was the consultation?

The consultation was predictable, is designed to stop the abuse of the rules, and put claims farmers out of business.

However, buyers of country-properties with paddocks and townhouses with basement flats will lose the opportunity to argue that significantly less Stamp Duty is payable.

The challenge for the Government, as always with changing the law, is identifying the knock-on impact on the market and minimising ‘collateral damage’, and that is what the consultation aims to do.

What are claims farmers?

Claims farmers are boutiques that send unsolicited letters to home-buyers promising to reclaim overpaid Stamp Duty in return for a significant fee. They argue that part of the purchased property or an outbuilding on the grounds of the property counts as a separate ‘dwelling’, or that paddocks, usually grazed by sheep on the completion date, do not count as part of the ‘grounds of the house.’

In both cases a significant Stamp Duty refund is claimed. Until now, the taxman has reacted with litigation, winning all cases so far at the tribunal. The consultation proposes changes to the Stamp Duty rules to stop their abuse and ensure they working as intended.

A large reclaim industry has developed over the last five years. In some cases, boutiques have acted unscrupulously in pushing arguments that are weak, contrived, and contrary to common sense. The proposed changes, therefore, make sense. The only surprise is that it has taken so long.

Would you like to know more?

If you would like to discuss this further, please contact Sean Randall using the details on this page.

For press enquiries, please contact David Barzilay.

You can also visit our Property sector hub for more information.