Could a tax tribunal ruling mean BTL investors avoid 3% stamp duty surcharge?

Buy-to-let investors could soon fill the HMRC with stamp duty surcharge refund requests. This is following on from a potential precedent set at a recent tax tribunal that saw a couple acquire a neglected building and were able to refute the additional 3% stamp duty charge on purchases of second homes.

It was revealed at the tribunal, held in Bristol, that potentially, buy to let investors could avoid paying the 3% stamp duty surcharge. This instance could cause many more landlords who have already paid the surcharge, to demand a refund from HMRC and suggests that many property purchases could fall short of the additional 3% surcharge and just consist of the standard rate stamp duty.

Paul and Nikki Bewley acquired their uninhabitable bungalow in Western-super-Mare and made the decision to bulldoze the original build in order to make way for a new property, thinking they would not accountable for the 3% charge for Taking on the additional property.

HMRC argued this view, believing that the 3% charge was applicable, as the property was capable of being used as a dwelling sometime in the future.

However, a recent tax tribunal ruled against the HMRC and in favour of Paul and Nikki Bewley, stating that they are only able to charge the 3% if the home is in an acceptable living condition right away.

HMRC has yet to decide on an appeal, stating: “We’re considering the judgment carefully.”

But, this ruling suggests that many buy-to-let landlords could be exempt from the 3% surcharge, when buying a property that is uninhabitable at the time they purchased it.

Commercial Trust Limited, a specialist buy-to-let broker, considers that this ruling could represent an opportunity for past claims from buy-to-let investors who have paid the additional 3% charge on properties that were uninhabitable at the time of purchase.