Some agents have charged homeowners a fee to reclaim the stamp duty paid on a home, suggesting they can claim the property is non-residential because it is uninhabitable.
However, such claims have left some homeowners liable for the full stamp duty land tax plus penalties and interest.
This follows a recent Court of Appeal judgment in the case of Mudan & Anor v HMRC, which confirmed that housing in need of repair should be charged residential rates of stamp duty and that repayment claims based solely on a property’s condition are not valid.
HMRC determines that if a property requires repairs but retains the fundamental characteristics of a dwelling, then it is still suitable for use as a dwelling and should attract residential rates of stamp duty. One factor in determining this is based on whether a property has previously been used as a dwelling.
HMRC said it would use civil and criminal powers to deal with those who “undermine the tax system”.
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Anthony Burke, HMRC’s deputy director of compliance assets, said: “The Court of Appeal’s decision is a major win, protecting public funds. Homebuyers should be cautious of allowing someone to make a stamp duty land tax repayment claim on their behalf. If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.
“Anyone who is unsure of the rules should check the stamp duty land tax guidance on Gov.uk.”
So far, for the 2025/26 tax year starting in April, HMRC has collected £4.6bn in stamp duty land tax.
