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Is Stamp Duty payable

Client forced by Solicitor to pay for stamp duty

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My client huband and wife moved from rented accomodation and brought their first home with the wife owning 70% share and husband 30%. Husband owned two rental properties.

Solicitor would not hand over the keys until they paid the higher rate stamp duty (SDLT).  Total amount payable was 12K.

This doesn't see correct as they have never owned a residential property previously.  How can they obtain the refund ?

 

Replies (21)

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RLI
By lionofludesch
21st Jan 2020 14:55

These rental properties aren't residential, then ?

Just to be sure, like......

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By taxwizard
21st Jan 2020 15:25

No they have never been residential

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Replying to taxwizard:
Hallerud at Easter
By DJKL
21st Jan 2020 16:08

Is there any ambiguity, are they positively commercial property having had no residential use for anyone?

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Replying to taxwizard:
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By bernard michael
22nd Jan 2020 10:12

taxwizard wrote:

No they have never been residential

Not even partially eg shops with flats over ??

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RLI
By lionofludesch
21st Jan 2020 15:33

It should never have been payable, then.

What's the solicitor thinking of ?

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By taxwizard
21st Jan 2020 16:15

Yes my client was put under pressure at the last minute as the estate agents solicitors wouldn't give the key until SDLT was paid so could not really argue. Now question how to recover it. I don't think some solicitors don't understand the rules completely over higher rate SDLT. To be honest I don't know much about the intricacies of higher rate SDLT either.

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Replying to taxwizard:
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By The Dullard
21st Jan 2020 16:25

If the SDLT is incorrect, it can be amended within 12 months, and, if there is a reduction in liability, a repayment will ensue.

What exactly is the nature of the husband's two rental properties? You're being vague.

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Replying to taxwizard:
RLI
By lionofludesch
21st Jan 2020 16:41

taxwizard wrote:

Yes my client was put under pressure at the last minute as the estate agents solicitors wouldn't give the key until SDLT was paid so could not really argue. Now question how to recover it. I don't think some solicitors don't understand the rules completely over higher rate SDLT. To be honest I don't know much about the intricacies of higher rate SDLT either.

I'd be asking the solicitor to pay. It's his mistake, it's his problem to wait for HMRC to refund the money.

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Replying to lionofludesch:
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By Tax Dragon
21st Jan 2020 16:52

I suspect the solicitor may be right. But asking the solicitor rather than us might reveal why. (Though some fairly heavy hints have been dropped.)

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Replying to taxwizard:
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By Accountant A
21st Jan 2020 18:56

taxwizard wrote:

Yes my client was put under pressure at the last minute as the estate agents solicitors wouldn't give the key until SDLT was paid

Never been party to a transaction where the estate agent's legal advisers have been involved! What's the SDLT got to do with them?!

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Replying to Accountant A:
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By Tax Dragon
22nd Jan 2020 06:35

That's a fair point. And who picks up the keys from the solicitor? First vagueness, now weirdness.

Or maybe it's neither - just our old friends confusion and misinformation.

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By SXGuy
21st Jan 2020 18:47

I had a nice solicitor a few months back who said consult a tax adviser first before I act on it. Which was good to know since I was a tax adviser. Luckly for the client there was a nice little reduction in sdlt which the solicitor would not have known about.

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My photo
By Matrix
22nd Jan 2020 07:27

You don’t just buy a house overnight and you have to have your own solicitor. So surely they had time to ask for advice?!

Why 70:30 and when did you get involved and why would they have told you their other rental properties are commercial but told the clerk completing the stamp duty form that they were residential?

Have you tried to be clever with some tax wizardry?

Thanks (0)
Replying to Matrix:
Hallerud at Easter
By DJKL
22nd Jan 2020 10:14

Maybe they are mixed use, who knows?

The one thing confusing me is that SDLT is a buyer's not a seller's tax, so why would agents for the seller be concerned it had been paid before handing over keys, it is surely none of their business, all agents for the seller want to know is has buyer paid them the purchase price?

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Replying to Matrix:
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By taxwizard
22nd Jan 2020 16:55

Rental properties have always been commercial and they never resided in a property they actually owned.

I don't know why the split 70:30.

Stamp Duty is not my forte

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RLI
By lionofludesch
22nd Jan 2020 10:23

Taxwizard - you're just going to have to ask the solicitor to explain his position.

The answer is entirely dependent on the facts.

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Replying to lionofludesch:
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By taxwizard
22nd Jan 2020 16:50

Just to explain a brief background. I have been engaged for the husband two rental properties in passing he mentioned about the stamp duty that the estate agent solicitors said to them that they need to pay the SDLT otherwise they will not get the keys. I am just trying to point them to the right direction to get their money back which as you say is the solicitors need to revert on the reason for the SDLT payment (and presumably they need to get the SDLT payment reference as well just in case they can apply for the refund themselves) . However the solictors have been very difficult and not helpful I assume they are the ones estate agents recommended to them as not sure if the estate agent have their own solicitors

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Replying to taxwizard:
RLI
By lionofludesch
22nd Jan 2020 17:17

You know what ?

I'd just write to HMRC and reclaim the SDLT and the Law Society to complain about the solicitors.

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By Tax Dragon
22nd Jan 2020 16:56

Why are you STILL not telling us about the rental properties?!!

Let's make it simple. Yes/no: do people rent them to live in?

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Replying to Tax Dragon:
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By The Dullard
22nd Jan 2020 18:03

That's not the right question. The question is whether they are dwellings; dwellings can still be dwellings without being lived in, provided that they are suitable to be so used. The OP has answered the wrong question, I think, but seems cagey (subject to stupidity) about answering the right question.

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Replying to The Dullard:
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By Tax Dragon
22nd Jan 2020 18:21

You think it's caginess or stupidity?

Sames.

And I can't see a reason to be cagey.

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