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SDLT briefing - October 2019


In this week’s SDLT briefing, Suzanne O’Hara looks at the potential savings to be made in claiming Multiple Dwellings Relief. Plus: a development in retrospective claims that could spell bad news for solicitors.   

We were recently approached by a private client seeking a second opinion in relation to a Stamp Duty Land Tax (SDLT) return that he'd submitted. 
Following our review, we determined that the transaction qualified for Multiple Dwellings Relief (MDR). This resulted in a refund of £57,000. 
The case involved a main residence with an adjoining annexe. Following our analysis, it was confirmed that the annexe would constitute a separate dwelling for the purposes of MDR. Furthermore, the annexe qualified as a subsidiary dwelling, so that the transaction was effectively treated as a single dwelling transaction. As the client was replacing their main residence, we were able to avoid the 3% higher rates of SDLT. 
Important points to note:
  • MDR claims can clearly be very valuable to your clients
  • they are not automatic, however, so you must make the claim via the return (or in an amended return)
  • if a claim is missed, an amended return can be made within 1 year of the submission of the original return (in exceptional circumstances a claim can be made within 4 years) 
In recent years, a number of boutique firms have concentrated their efforts on identifying transactions that may qualify for MDR (one way of doing so is to trawl the Land Registry for recently concluded transactions). The firm will then approach the prospective client with the offer of success fees based on a percentage of any refund obtained. This can obviously prove damaging to the relationship between the client and the original solicitor. 
More worryingly, it has very recently come to our attention that such firms have begun to look outside the 1 year amendment window, and are approaching clients on the basis that a claim should be made against their solicitors’ Professional Indemnity Insurance policy. We're aware of one such case in which the original transaction occurred in 2014 and the claim against the solicitor is only now being instigated. 
SDLT is becoming increasingly complex. If in doubt, seek professional advice. 
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