Stamp duty experts Cornerstone Tax helped Marcus & Marcus Ltd win a £20,000 refund after the company overpaid for their Stamp Duty in a case which took nearly seven years to conclude. The case has now become the “leading authority” in this area and is a reference point for other practitioners who are having the similar arguments with HMRC. In 2015, Marcus & Marcus Ltd acquired a property which consisted of several buildings including a main house, an annexe and a summerhouse. The Appellant submitted an SDLT return indicating SDLT due of £33,750 and paid the same. HMRC subsequently opened an enquiry and declared that as a company, the Appellant was liable to SDLT of 15% on the property, equal to £131,250, and issued a closure notice to that effect – an increase of £97,500 or 289% additional tax. Cornerstone Tax were appointed in 2018 and subsequent negotiations that year between both parties meant they reached an agreed conclusion that a new calculation – Multiple Dwellings Relief (‘MDR’) – would be applicable and it would be done on a ‘just and reasonable apportionment’.

The issue before the tribunal was to determine what constitutes a just and reasonable apportionment of the consideration. HMRC’s calculations would leave the main house having a value of over £500,000 and therefore excluded from the MDR calculation. Conversely, the Appellant’s calculation would leave the main house at less than £500,000, and equally subject to MDR.

Having mutually agreed a method of apportionment – working out a value per square metre for the property and then using this with the various square metreage of each of the buildings within it – the parties found themselves in disagreement as to the precise application of this method. HMRC’s assessment combined the main house together with the ‘office’ and ‘summerhouse’ (two entirely separate buildings on the plot), which pushed the value of what HMRC assessed to be the ‘main house’ to £537,000. By contrast, the Appellant and Cornerstone Tax contended that the office and summerhouse comprised part of the annexe, and therefore remained separate from the main dwelling. This would give the ‘main house’ an apportioned value under the agreed metrics of £404,867. Unable to reach agreement, the parties brought the matter before the First Tier Tax Tribunal in April 2022.

The judge found that the summer house was occupied with the main house and the office was part of the dwellings in the annexe. On the question of the mechanism of apportionment, the judge found that the agreement reached between the parties was just and reasonable in the circumstances and would therefore be applied on the basis of her findings of fact. It was determined that the total actual SDLT liability at the time of purchase should have been £13,749, and that the Appellant was therefore due a refund from HMRC of £20,001.

Cornerstone Tax’s guidance meant that the client ended up with a £20,000 refund they would not otherwise have known to claim, amounting to a £117,500 reversal of HMRC’s position. Over the past 12 months, Cornerstone Tax has completed 335 cases with total tax saved for their clients standing at over £16 million – amounting to £48,000 saved on average per case. This comes after Cornerstone Tax uncovered that around 75,000 people could be owed £80,000 each after being told to pay Stamp Duty on commercial properties put into their personal pensions.