SDLT Appeals: How To Challenge A Stamp Duty Decision

You've been told you owe thousands more in stamp duty than you expected—or a claims company says you're owed a refund. Either way, you need to know whether you have a real dispute and how to challenge it.

Stamp Duty Land Tax (SDLT) is the tax you pay when you buy property or land in England and Northern Ireland. It's a self-assessed tax: your solicitor calculates the amount, files the return, and pays the tax on your behalf—usually without you seeing the detail. When a dispute arises, you may not even know what was claimed on your return.

SDLT has its own compliance and appeal regime in Schedule 10 to the Finance Act 2003. The principles will be familiar if you've dealt with income tax disputes, but every deadline, penalty, and procedure reference is different.

What Is SDLT And When Does It Apply?

SDLT is charged on "land transactions" under Part 4 of the Finance Act 2003. It applies to purchases of property or land in England and Northern Ireland. Scotland has its own Land and Buildings Transaction Tax (from April 2015) and Wales has Land Transaction Tax (from April 2018)—neither is covered here.

The return must be filed within 14 days of the effective date—usually the date of completion. This is one of the tightest filing deadlines in UK tax. Your solicitor files the return electronically and pays the tax at the same time.

On successful filing, HMRC issues an SDLT5 certificate, which the Land Registry requires before it will register your title. Without that certificate, you cannot be registered as the legal owner of the property.

SDLT is self-assessed: you (or your solicitor) calculate the tax, file the return, and pay what's due. HMRC can then check the return through an enquiry or a discovery assessment. Current rates depend on whether the property is residential, non-residential, or mixed-use, and whether surcharges apply. Use the GOV.UK SDLT calculator to check what should have been paid on your transaction.

The Most Common SDLT Disputes

Higher Rates Surcharge (5%)

The single most common SDLT dispute. If you buy an additional residential property worth more than £40,000 and already own another dwelling, you pay a 5% surcharge on top of the standard rates under Schedule 4ZA FA 2003. The rate increased from 3% to 5% from 31 October 2024. On a £400,000 property, the surcharge alone is £20,000.

The replacement main residence exception. Higher rates do not apply if you are replacing your only or main residence. If you buy before selling, you pay the surcharge upfront—but can claim a refund if the old property is sold within three years. The claim must be made within 12 months of the sale (or 12 months from the filing date, whichever is later). HMRC can extend the three-year deadline in exceptional circumstances.

The spouse trap. Under paragraph 9 of Schedule 4ZA, if your spouse or civil partner owns another dwelling, it counts as yours. A couple where one partner already owns a property will pay the surcharge when the other buys—even if the purchasing spouse has never owned property before.

What counts as a "dwelling"? In P N Bewley Ltd v HMRC [2019] UKFTT 65 (TC), a derelict bungalow with no radiators, no pipework, and asbestos throughout was held not to be "suitable for use as a dwelling"—non-residential rates applied.

But the threshold is high. In Mudan v HMRC [2023] UKFTT 317 (TC), a property needing significant renovation was still held to be a dwelling. The test is objective suitability at the date of purchase, not current safety or the buyer's renovation plans.

Combining properties. In Moaref v HMRC [2020] UKFTT 396 (TC), a couple bought two adjacent apartments intending to combine them into one main residence. The tribunal held that the replacement exception applies to each dwelling as purchased—not to the intended end result. Neither flat individually was the main residence, so the surcharge stood on both.

Mixed-Use Claims

If a property is "mixed-use"—part residential, part non-residential—it is taxed at the lower non-residential rates, which can produce substantial savings. But the definition of "residential" in section 116 FA 2003 is broad: it includes the building itself plus any land that forms part of its garden or grounds.

The Court of Appeal's decision in Hyman v HMRC [2022] EWCA Civ 185 effectively closed the door on most mixed-use refund claims. Lewison LJ held that the words of section 116 are clear and unambiguous, and that there is no objective quantitative limit on what counts as "garden or grounds" of a dwelling. Paddocks, stables, outbuildings, and woodland can all fall within the "grounds" of a dwelling.

In the joined appeal Goodfellow v HMRC [2021] UKUT 68 (TCC) (heard with Hyman at the UT and CoA), a house with 4.5 acres including stables, paddocks, and a swimming pool was held to be entirely residential. The tribunal dismissed all of the mixed-use arguments. Working from home does not make a property mixed-use.

A warning about claims companies. Since Hyman, claims companies have continued to cold-call homebuyers offering SDLT refunds on the basis that paddocks or outbuildings make their property "mixed-use." Post-Hyman, these claims almost always fail. Fees are worth checking carefully—some companies charge 25-50% of any refund—and an amended return will likely trigger an HMRC enquiry.

If the claim fails after a refund has been paid, the practical consequences are serious: you must repay the refund in full, HMRC will charge interest at 7.75% from the date the refund was paid until the date of repayment, the claims company's fee is typically non-refundable, and HMRC may charge an inaccuracy penalty under Schedule 24 FA 2007 if the amended return is treated as careless. The claims company is not liable for the tax—you are.

Mixed-use treatment can still genuinely apply—for example, where a property includes a separately let commercial unit or working farmland. But properties with large gardens, paddocks used recreationally, or outbuildings ancillary to the dwelling will almost certainly be treated as residential after Hyman.

First-Time Buyers Relief

If you're a first-time buyer purchasing a home you intend to occupy as your only or main residence, you may qualify for first-time buyers relief under Schedule 6ZA FA 2003. The relief gives 0% on the first £300,000 of the price and 5% on the slice from £300,001 to £500,000. The property must not exceed £500,000—above that threshold, no relief is available at all.

To qualify, every purchaser must be a first-time buyer, the property must be a single dwelling, and you must intend to live in it as your only or main residence. Joint purchases with anyone who has previously owned a residential property anywhere in the world do not qualify.

Disputes typically arise when HMRC challenges whether a purchaser was genuinely a "first-time buyer" or whether the £500,000 cap was correctly applied. If you believe relief was wrongly denied—or you failed to claim it on the original return—you can usually correct this by amending the return within 12 months. After that window closes, recovery becomes much harder: as the LLO Contracting case below shows, simply having missed a relief is not always enough to use overpayment relief.

Multiple Dwellings Relief (Abolished)

Multiple Dwellings Relief (MDR) was repealed by section 7 of the Finance (No. 2) Act 2024 for transactions with effective dates on or after 1 June 2024. Before abolition, MDR allowed purchasers of two or more dwellings in a single transaction to calculate SDLT on the average value rather than the aggregate. Transitional provisions protect contracts exchanged on or before 6 March 2024 that complete after 31 May 2024. Pre-abolition claims are still being litigated.

Two cases illustrate the limits. In Fiander and Brower v HMRC [2021] UKUT 156 (TCC), a main house and annexe connected by a corridor with no separating door were held to be a single dwelling—the annexe lacked sufficient privacy and security for independent use. In Ladson Preston Ltd v HMRC [2022] UKUT 301 (TCC), bare land with planning permission for 218 flats could not claim MDR—planning permission alone does not satisfy the "in the process of being constructed" test.

After abolition, the six-or-more dwellings rule in section 116(7) FA 2003 still applies: transactions involving six or more separate dwellings are treated as non-residential.

Correcting Your SDLT Return

There are two routes to recover overpaid SDLT, and the distinction between them matters.

Amend the return under paragraph 6 of Schedule 10: you have 12 months from the filing date. This is straightforward—you simply file an amended return showing the correct amount. No restrictions apply beyond the time limit.

Overpayment relief under paragraph 34 of Schedule 10: you have 4 years from the effective date. This is the fallback route when the amendment window has closed. But paragraph 34A sets out seven exclusions (Cases A to G) where HMRC can refuse the claim.

The most important exclusion is Case A: HMRC need not give effect to a claim where the overpayment resulted from "a mistake consisting of failing to make...a claim." In LLO Contracting Ltd v HMRC [2025] UKUT 127 (TCC), purchasers who didn't claim MDR in their original returns—because they didn't know about it—tried to use overpayment relief after the amendment window closed. The Upper Tribunal dismissed the appeals: not knowing about a relief is still a "mistake" that triggers Case A.

But overpayment relief is not completely blocked. In Candy v HMRC [2025] UKFTT 416 (TC), a purchaser paid £1.92 million in SDLT on a contract that was later rescinded. The amendment window had expired. The tribunal held that paragraph 34 provides a "back-stop" remedy—available where the overpayment results from a supervening event rather than a failure to claim a relief.

The practical distinction: if you simply failed to claim a relief you were entitled to, Case A blocks overpayment relief (LLO). If something happened after filing that made the SDLT overpaid, paragraph 34 may still help (Candy).

The SDLT Enquiry And Discovery Regime

Enquiries

HMRC can open an enquiry into your SDLT return under paragraph 12 of Schedule 10. The enquiry window is 9 months from the filing date—shorter than the 12-month window for income tax enquiries. If the return was filed late, the window runs from the date of actual delivery.

The enquiry can cover whether SDLT is chargeable and the amount due (paragraph 13). HMRC will typically ask for documents supporting the classification of the property—valuations, photographs, floor plans, solicitor's completion statements. Our guide to HMRC enquiries and closure notices explains the general process. The SDLT regime works on the same principles, with the key difference being the shorter enquiry window.

The enquiry ends with a closure notice (paragraph 23), stating either that no amendment is required or making amendments to your return. If HMRC is dragging its feet, you can apply to the tribunal for a direction requiring HMRC to issue a closure notice within a specified period (paragraph 24).

Revenue Determinations (Where No Return Was Filed)

If you never filed an SDLT return at all—a common scenario for DIY conveyancers who didn't know one was required—HMRC can issue a revenue determination under paragraphs 25-27 of Schedule 10. This is HMRC's estimate of the tax due, made without your input. HMRC has 4 years from the effective date to make a determination, and once issued it is treated as a self-assessment for enforcement purposes. HMRC can collect the tax as if you had filed the return yourself.

The good news: a determination is automatically displaced if you file an actual SDLT return. You have until the later of 4 years from the effective date or 12 months from the date of the determination to file. This is usually the right move—your real return will almost always show a different (and often lower) figure than HMRC's estimate.

The grounds for appealing a determination directly are very limited (paragraph 36(3)): you can argue no purchase occurred, the interest was not actually purchased, the contract was not substantially performed, or the transaction was not notifiable. If you simply disagree with the figure, the answer is to file the return rather than appeal the determination.

Discovery Assessments

If the enquiry window has closed, HMRC can raise a discovery assessment under paragraphs 28-31 of Schedule 10. The principles mirror section 29 TMA 1970, but the time limits differ:

Where a return has been filed, HMRC can only make a discovery assessment if the situation was attributable to the purchaser's (or agent's) fraud or negligence, or if HMRC could not reasonably have been aware of the insufficiency from the information available (paragraph 30). This is the same "hypothetical officer" test from income tax cases like Charlton, confirmed for SDLT in Brosch v HMRC [2023] UKFTT 945 (TC).

How To Appeal An SDLT Decision

What You Can Appeal

Paragraph 35 of Schedule 10 sets out the decisions you can appeal: amendments made during an enquiry, closure notices, discovery assessments, excessive repayment assessments, and HMRC determinations.

The 30-Day Deadline

You must appeal in writing within 30 days of the relevant notice (paragraph 36). Your notice of appeal must specify the grounds of appeal. If you've missed the deadline, you'll need to apply for permission to make a late appeal—the Martland three-stage test applies to SDLT appeals just as it does to income tax.

Three Routes After Appealing

The review and appeal procedures in paragraphs 36A-36I mirror the income tax provisions. After filing your appeal, you have three options:

1. Request an HMRC review (paragraph 36B)—a different officer reviews the decision within 45 days. Free and does not prevent a subsequent tribunal appeal. For how reviews work, see our HMRC internal review guide.
2. Accept HMRC's offer of a review (paragraph 36C)—if HMRC offers one, you have 30 days to accept. If you don't respond, HMRC's view is treated as agreed.
3. Notify your appeal to the tribunal directly (paragraph 36D)—skip the review and go straight to the First-tier Tribunal (Tax Chamber).

If the review upholds the decision, you have a further 30 days to notify the tribunal.

The appeal goes to the same tribunal as income tax disputes. There is no fee (£0). You can appeal online or by post using Form T240. For a step-by-step guide, see how to appeal to the tax tribunal. For help structuring your arguments, see writing grounds of appeal.

Cases take typically 6-12 months to resolve. Most SDLT appeals are allocated to the Basic or Standard category—for what this means in practice, see our guide to tribunal tracks and costs.

Postponing Payment During Your Appeal

You do not have to pay the full disputed amount while your appeal is pending. Schedule 10 paragraphs 39-40 provide a postponement mechanism similar to section 55 TMA for income tax.

Write to HMRC within 30 days of the assessment, setting out reasonable grounds for believing you have been overcharged. If HMRC agrees, the postponed amount is confirmed in writing. If they disagree, you can refer the question to the tribunal within 30 days of their refusal. Tax that is not postponed remains due as if no appeal had been made, and interest continues to accrue on unpaid amounts at 7.75%.

One caveat: accelerated payment notices under the Finance Act 2014 (typically in avoidance scheme cases) can override postponement under paragraphs 39(9)-(11).

SDLT Penalties

SDLT has its own penalty regime for late filing—separate from the Schedule 55 FA 2009 regime that applies to income tax.

Late Filing Penalties

Under paragraphs 3-5 of Schedule 10:

These are modest compared to income tax late filing penalties—but the tax-related penalty for returns over 12 months late can be substantial.

To appeal an SDLT penalty, HMRC has a dedicated form, SDLT46, or you can write a letter setting out the grounds. Either way, you must appeal within 30 days of the penalty notice.

Inaccuracy Penalties

If your SDLT return contains an inaccuracy leading to an understatement of tax, HMRC can charge a penalty under Schedule 24 FA 2007—the same regime as income tax. Careless: up to 30%. Deliberate: up to 70%. Deliberate and concealed: up to 100%. See our penalties guide for how these work.

Reasonable Excuse

The reasonable excuse defence applies to SDLT penalties just as it does to income tax. The four-step Perrin test determines whether you had a reasonable excuse for the failure. The most common scenario is a late filing penalty where a DIY conveyancer did not know a return was required—for example, because the purchase was within the nil-rate band but above the £40,000 notification threshold. Whether ignorance of the filing obligation amounts to a reasonable excuse depends on the specific facts.

Key Differences From Income Tax Appeals

If you've dealt with income tax disputes, the SDLT regime will feel familiar—but the details differ.

The SDLT5 certificate is a uniquely powerful enforcement mechanism. Failing to file the return doesn't just attract a penalty—it prevents you from being registered as the legal owner of the property.

What To Do Now

1. Check the deadline. You have 30 days from the date of the decision to appeal. This applies to enquiry closure notices, discovery assessments, and penalty notices alike.

2. Understand what was filed. Ask your solicitor for a copy of the SDLT return they filed on your behalf. You need to know what was claimed before you can assess whether HMRC's position is correct.

3. Check the numbers. Has HMRC applied the correct rates? Has the surcharge been charged correctly? If you're entitled to the replacement main residence exception, has it been applied? Use the GOV.UK calculator to verify.

4. Consider a review. A statutory review by a different HMRC officer is free and must be completed within 45 days. It does not prevent a subsequent tribunal appeal.

5. Apply for postponement if needed. Write to HMRC within 30 days of the assessment, setting out why you believe you've been overcharged. See our postponement guide for the process.

6. Appeal to the tribunal if necessary. There is no fee (£0). Our guide to appealing walks you through the process step by step.

Key Legislation And Resources

Legislation

• Part 4, Finance Act 2003—SDLT charging provisions
• Section 55, FA 2003—SDLT rates
• Section 76, FA 2003—filing deadline (14 days)
• Section 116, FA 2003—definition of residential property
• Schedule 4ZA, FA 2003—higher rates for additional dwellings
• Schedule 6ZA, FA 2003—first-time buyers relief
• Schedule 10, FA 2003—compliance, enquiries, discovery, penalties, and appeals
• Schedule 24, FA 2007—inaccuracy penalties
• Section 7, Finance (No. 2) Act 2024—abolition of MDR

Key Cases

• Hyman v HMRC [2022] EWCA Civ 185—"grounds" has a wide meaning; killed most mixed-use claims
• Goodfellow v HMRC [2021] UKUT 68 (TCC)—paddocks and stables are residential grounds
• P N Bewley Ltd v HMRC [2019] UKFTT 65 (TC)—derelict bungalow not a dwelling; non-residential rates applied
• Mudan v HMRC [2023] UKFTT 317 (TC)—property needing renovation still a dwelling
• Moaref v HMRC [2020] UKFTT 396 (TC)—replacement exception applies per dwelling as purchased
• Fiander and Brower v HMRC [2021] UKUT 156 (TCC)—connected annexe not a separate dwelling for MDR
• Ladson Preston Ltd v HMRC [2022] UKUT 301 (TCC)—planning permission alone insufficient for MDR
• Candy v HMRC [2025] UKFTT 416 (TC)—para 34 overpayment relief as "back-stop" for supervening events
• LLO Contracting Ltd v HMRC [2025] UKUT 127 (TCC)—Case A blocks overpayment relief for missed claims
• Brosch v HMRC [2023] UKFTT 945 (TC)—hypothetical officer test applies to SDLT discovery
• Project Blue Ltd v HMRC [2018] UKSC 30—s.75A anti-avoidance; no avoidance motive required

GOV.UK Guidance

• SDLT overview—rates, reliefs, and filing
• SDLT calculator—calculate what you owe
• Higher rates guidance—additional dwellings surcharge and refund process
• SDLT returns guidance—filing process
• Appeal against a penalty (SDLT46)—penalty appeal form and guidance
• Refund of higher rates—replacement main residence refund

On This Site

• How to appeal to the tax tribunal—step-by-step filing guide
• Writing grounds of appeal—structuring your case
• HMRC internal review—the free review step before the tribunal
• Late appeal to the tax tribunal—if you've missed the 30-day deadline
• Discovery assessments—the income tax equivalent (s.29 TMA 1970)
• HMRC enquiries and closure notices—the enquiry process explained
• Postponing payment during appeal—s.55 TMA and SDLT equivalents
• What is a reasonable excuse?—the general framework
• Perrin v HMRC—the four-step reasonable excuse test
• HMRC penalties explained—penalty types and calculations
• Interest on unpaid tax—how late payment interest works
• Tribunal tracks and costs—case categories and costs regime
• Settling your tax tribunal case—settlement as an alternative
• Tooth v HMRC—what "deliberate" means for inaccuracy penalties

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.