HM Revenue & Customs has intensified its scrutiny of property transactions as a result of the Angela Rayner controversy, it’s claimed.
“After the recent public attention around the Angela Rayner case, HMRC is likely to step up its scrutiny on second property acquisitions” according to Graham Caddock, director of tax advisory service Lubbock Fine.
Stamp Duty Land Tax (SDLT) investigations rose 88% to 3,035 in 2024/25, following the additional SDLT rate for second properties was increased from 3% to 5% in October 2024.
Lubbock Fine says this has created a greater financial incentive for purchasers of a second property to mislead HMRC.
It also claims that the increased complexity of SDLT is leading to more people making mistakes when declaring.
Some HMRC investigations have involved buyers falsely claiming that they are replacing their main residence to avoid the SDLT surcharge on purchasing additional properties.
Some transfer their home into a trust or to their partner before buying another property, which HMRC does not treat as valid grounds for avoiding the surcharge.
Caddick says: “HMRC looks at many different factors to decide what counts as your main residence. Whether a property has been transferred into a trust or a partner doesn’t necessarily carry much weight with HMRC.”
Many SDLT investigations involve buyers wrongly assuming a property with some commercial use, such as self-contained rental flats, qualifies for a lower SDLT charge.
However, that is only true in very limited circumstances.
To qualify, the commercial parts must be clearly separate, unsuitable for normal living, and the commercial activity ongoing when the property is bought.
The taxman has also been cracking down on bogus claims for SDLT refunds, where the buyer claims a property is not a residential home because it needs repairs and is not inhabitable.
This article is taken from Landlord Today