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Consumers warned about spike in stamp duty refund companies

ended 09. March 2023

Professional portfolio landlord, Kundan Bhaduri, has warned the public against a spike in the number of ambulance-chasing companies claiming to get buyers a refund of their stamp duty. Bhaduri says he is regularly approached by these companies, some of which operate on a ‘no win, no fee’ and 'fully indemnified' basis. We asked property lawyers, brokers and IFAs for their views on stamp duty refund companies and what they advise people to do if they have an SDLT query.

7 responses from the Newspage community

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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
We encourage our clients to seek advice from their solicitor on SDLT or direct from HMRC themselves. Avoid third parties where you can as you will be liable for the tax if HMRC demands its money back. Third parties will often mislead the public by offering a chance to have these large sums refunded but the issues arise later down the line when HMRC sees that the SDLT has been refunded incorrectly. This could be costly to the individual, at which point the commonly known 'ambulance chaser' is nowhere to be seen.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
The Bewley v HMRC judgement has opened a veritable Pandora's box of SDLT refund claims. While a number of these claims are genuine, a bunch of fly-by-night operators have cropped up, who can be easily found online if you tap 'stamp duty refunds' into Google. I get contacted by them regularly, as I'm a portfolio landlord. They claim to get unsuspecting home buyers refunds on stamp duty for basic defects in their properties such as damp or mould or unmodernised houses. These cases are way outside of the HMRC judgement and do not warrant a claim for an SDLT refund. Since HMRC operates on a 'refund now, investigate later' policy, these companies will often get a hefty share of the claim and then leave their clients open to investigations and penalties later on. Be wary of them as many might not be around when HMRC comes knocking on your door.
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Tahina Akther
Barrister and Co-Founder at Wildcat Law
We have seen a rise in SDLT enquiries and there undoubtedly are a number of genuine cases where significant errors have taken place. The problem for many of those impacted is that they may end up handing over a large proportion of any sums recovered unnecessarily. Our advice for anyone who believes they may have a claim is to contact an SRA-regulated law firm for advice if they are not confident of managing the process themselves. Where there is an issue, someone will always find a way to monetise it, so be wary of stamp duty refund firms that may not have your best interests at heart.
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Zaeem Khan
Director at RMZ Law Offices
One of the main sources of negligence claims against solicitors is incorrect stamp duty calculations, hence there is no surprise these companies are operating. Property lawyers must have a solid relationship with at least one specialist stamp duty adviser who they can turn to for help. Property lawyers are also advised to clearly highlight their limitations of stamp duty rules in their engagement letters so that clients are not surprised when their matter is referred to an SDLT specialist and the specialist's fee is payable. It's property lawyers against the world in the current framework.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
HMRC's guidance on this is complex and I can understand how these firms have cropped up. However, if you think you might be entitled to a stamp duty refund, it is probably cheaper and easier to speak to a local property lawyer who will be able to tell you very quickly if you are. If you are up to speed on the regulations yourself, you can apply for a refund through the Government Gateway and it will take all of five minutes. The main reason people are due a refund is if they bought a second property to replace their main residence, but didn't sell their home until after the purchase of their new home was completed. However, there are other reasons for a refund, too.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Stamp Duty Land Tax (SDLT) is a difficult subject. Despite the fact that it is a tax, most accountants are unfamiliar with it and defer to lawyers. However, because lawyers are not tax experts, there may be instances where the incorrect amount of stamp duty is paid. HMRC publishes the guidelines, and there is a stamp duty helpline if you have any questions. If that fails, you could engage the services of a qualified tax adviser who specialises in SDLT to assist you. If you do, it is important you are aware of their costs and charging structure from the outset.
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Thomas Collier
Advising Director at Advantage Financial Solutions
I don't necessarily see this as a bad thing. If people have wrongfully overpaid stamp duty then they deserve their money back. We're talking potentially big sums here. The main question I have is how it came to this in the first place. SDLT is not the most complex tax bill to calculate at the end of the day. We're careful not to overstep the mark in any way, though. I firmly recognise that I'm not a qualified tax expert and I refer my clients to an expert that we work closely with for any SDLT query that is slightly unusual.