The tax man has lost a legal challenge against paying enhanced stamp duty rates on the purchase of a derelict bungalow scheduled for demolition.
HM Revenue & Customs claimed the bungalow was a home even if the property was unfit to live in and sent buyers Paul and Nikki Bewley a stamp duty bill for £7,500 as they were buying an additional home and already had a main residence.
The decision added £6,000 to the stamp duty bill of £1,500 for the £200,000 bungalow the couple considered a non-residential property.
The Bewleys refused to pay, pointing out that the bungalow had no heating or boiler, was dilapidated and surveyors had issued an alert about health risks from asbestos in the pre-fabricated walls and ceilings.
HMRC refused to change the stamp duty assessment, so the Bewleys appealed to the First Tier Tribunal in Bristol.
Presiding judge Richard Haarer upheld the appeal and reduced the couple’s stamp duty bill to £1,000.
He told HMRC that the stamp duty test rested on if the property was a home at the point of purchase, not that someone might live there sometime in the future.
Think-tank wants four year buy to let tenancies
A think-tank headed by a leading government adviser is calling for automatic four-year tenancies for private renters.
The Centre for Social Justice argues the tenancies would give tenants more security that they could stay in their homes if Section 21 no fault evictions were banned.
The study also urged the government to cancel the reduction in mortgage interest relief for landlords and to go ahead with a new housing court to speed up evictions for rent arrears and renters breaking their tenancy agreements.
The CSJ commission publishing the report is headed by Lord Best, who is helping the government with letting and estate agent reform.
“The CSJ is right to stress that while the types of households living in the private rented sector have changed profoundly over the last two decades, the rules governing the sector have not kept apace.,” he said.
Rents up just £5 in a year
Buy to let rents increased by just £5 a month in the year to February, according to the latest data from the Office For National Statistics.
Rents in England and Wales were up 1.1% over the year, while landlords in Scotland saw a rise of just 0.7%.
In London, rents grew by 0.2% – twice the 0.1% rate recorded in January.
The Bewleys was just one example of how HMRC are treating developers, investors and homeowners where they buy non residential properties. Many cases are challenged by them and, without professional advice and suppport, many buyers are paying additional tax that HMRC demands that simply isn’t due. We have had many examples of this and have been able to win the argument without the need to go to Tribunal. Unfortunately we are finding that, like the Bewleys, many purchasers are paying too much SDLT to start with but, happily, we are able ot get them a refund of the overpayment.