Common HMRC mistake saw one business owner scoop £18.5k refund

Posted 27th October 2023 by ctatax-admin

Reclaim overpaid stamp duty on your SSAS or SIPP pension transfer

Read the article in The Mirror

“The tax specialists at Cornerstone claim Peter isn’t the only person who has paid stamp duty when they didn’t need to and on average overpayments to HMRC currently sit at £27,000

One homeowner has shared how they managed to receive a refund of £18,500 from HMRC after he had been mistakenly charged stamp duty.

Peter Loyal, 68, based in Leicestershire owned a property which he wanted to transfer into a pension trust scheme. This would see the value of the property classed as a pension contribution instead of a cash payment.

The property was transferred into pension scheme at the value of £580,000 in 2016. As Peter rented out the property, it was classed as a “property investment partnership” and in HMRC’s eyes, he had to pay stamp duty on it, totalling £18,500.

However a few years after the transfer was done and the stamp duty was paid, Peter’s accountant discovered that he didn’t need to pay stamp duty at all. Under HMRC rules, if the partnership scheme and the pension scheme are “connected” then no stamp duty payments are due.

Reclaim overpaid stamp duty on your SSAS or SIPP pension transfer

As Peter never needed to pay stamp duty, he had actually overpaid and was due a refund of the entire £18,500 payment he had made to HMRC. Peter’s accountant directed him to property tax specialist firm Cornerstone.

Cornerstone claims Peter isn’t the only person who has paid stamp duty when they didn’t need to. The tax specialists claim that the average overpayment to HMRC currently sits at £27,000.

According to Cornerstone, pensions are often the “major source of errors” as businesses often sell their premises to their pension fund as part of retirement planning. Errors are said to have been made when solicitors mistakenly assumed that stamp duty must be paid on the transfer of property from multiple owners into Small Self-Administered Schemes (SSASs) and Self-Invested Personal Pensions (SIPPs). Based on figures released by the firm, up to 75,000 people could be owed compensation of up to a staggering £80,000 each.

Cornerstone submitted the claim for a refund for Peter’s £18,500 in October 2019 and after some back and forth between Cornerstone and the tax office – Peter finally received his refund of £18,500 – plus £352.77 extra from interest in March 2020.

Peter said: “I was introduced to Cornerstone by my accountant, who notified me that there was a possibility I had been overcharged on stamp duty when transferring my property into my pension. Cornerstone investigated my transaction and found that I had overpaid on stamp duty, and they were successful in reclaiming a refund for me from HMRC. Both my accountant and Cornerstone were a pleasure to deal with and were efficient at gaining the refund for me.”

Group Chairman of Cornerstone Tax, David Hannah, said the overpayments occurred because people were simply not aware of and did not utilise the reliefs and exemptions which are in place under HMRC rules. Cornerstone says it has successfully reclaimed over £30million in overpaid stamp duty fees over the past three years alone through commonly overlooked stamp duty reliefs linked to Multiple Dwellings Relief, Uninhabitable Status and Pensions.

David said: “By conducting a thorough analysis, seeking professional advice, and understanding the applicable regulations, you can minimize the risk of overpaying stamp duty. However, if an overpayment does occur, initiating a review promptly allows you to rectify the situation, gather evidence, and pursue appropriate actions to claim a refund or make adjustments as required.”

Reclaim overpaid stamp duty on your SSAS or SIPP pension transfer