Stamp Duty Disputes
Comprehensive guide to challenging HMRC stamp duty assessments, including internal reviews, Alternative Dispute Resolution, and formal appeal procedures.
In this article
If you believe HMRC has incorrectly assessed your stamp duty liability, you have several options to challenge their decision. The dispute resolution process includes informal internal reviews, Alternative Dispute Resolution (ADR) mediation, and formal appeals to the First-tier Tribunal. Understanding these mechanisms and acting within strict time limits is crucial for protecting your rights.
Common Grounds for Dispute
Typical reasons for challenging HMRC stamp duty assessments
Valid Dispute Grounds
- Incorrect Property Valuation: HMRC disputes the purchase price or considers linked transactions that shouldn't be linked
- Relief Eligibility: Disputes over first-time buyer relief, multiple dwellings relief, or other exemptions that HMRC has denied
- Surcharge Application: Challenging the 5% additional property surcharge when you believe you qualify for an exemption or are replacing your main residence
- Calculation Errors: Mathematical mistakes in applying rates or computing liabilities across transaction elements
- Mixed-Use Property Classification: Disagreement over whether property qualifies as residential or non-residential for SDLT purposes
- Linked Transactions: Challenging HMRC's assertion that separate purchases should be treated as linked, increasing the effective rate
Internal Review Process
First step in resolving stamp duty disputes with HMRC
How It Works
Before escalating to formal appeal, you can request an internal review where a different HMRC officer examines your case. This is free, informal, and often resolves disputes quickly without tribunal involvement.
Request Review
Write to HMRC within 30 days of receiving the assessment, explaining why you disagree and requesting an internal review. Include all supporting documentation.
Officer Review
A different HMRC officer (not involved in the original decision) examines your case afresh, considering all evidence and arguments presented.
Decision Letter
HMRC responds within 45 days (or 30 days for simple cases), either upholding, varying, or cancelling the original assessment.
Further Options
If unsatisfied with the review outcome, you have 30 days to appeal to the First-tier Tribunal or request ADR mediation.
Time Limits Preserved
Requesting an internal review does not extend the 30-day appeal deadline. The clock continues running, so if HMRC doesn't respond within their timeframe or you remain unsatisfied, ensure you lodge a formal appeal before the deadline expires.
Alternative Dispute Resolution (ADR)
Mediated settlement without tribunal proceedings
ADR is a voluntary mediation service where an independent HMRC mediator helps you and the tax authority reach agreement without going to tribunal. It's available after you've notified an appeal to the tribunal but before the hearing takes place.
Key Features
Cost & Speed
Free service with resolution typically within 2-4 weeks, much faster than tribunal proceedings which can take 6-12 months.
Confidential Process
All discussions are confidential and 'without prejudice', meaning they cannot be used in subsequent tribunal proceedings if mediation fails.
Flexible Outcomes
Mediator helps find pragmatic solutions that may include compromise settlements, phased payments, or clarification of facts.
No Obligation
Either party can withdraw at any time and proceed to tribunal. Mediation doesn't prejudice your position or legal rights.
When ADR Works Best
- Factual disputes where both parties have legitimate interpretations of circumstances
- Technical valuation disagreements that might benefit from expert mediation
- Cases where relationship preservation matters for ongoing tax affairs
- Situations where legal costs would be disproportionate to the disputed amount
Formal Appeal Process
Appealing to the First-tier Tribunal (Tax Chamber)
Critical 30-Day Deadline
You must notify your appeal to the First-tier Tribunal within 30 days of the date on HMRC's decision letter. This deadline is strictly enforced. Late appeals require tribunal permission and compelling reasons. Missing this deadline can permanently forfeit your right to challenge the assessment.
Appeal Stages
1. Notice of Appeal
Submit form to the First-tier Tribunal Tax Chamber, setting out grounds for appeal, relevant facts, and what you want the tribunal to decide. Include copies of all relevant correspondence with HMRC.
Fee: £50 for claims under £20,000; £200 for larger claims (fee waiver available on hardship grounds)
2. HMRC Response
HMRC files a statement of case defending their assessment. You may file a reply to their statement. Case management directions are issued setting timetables for evidence exchange and hearing preparation.
3. Evidence Gathering
Both parties exchange witness statements, expert reports (especially valuations), and documentary evidence. Consider instructing specialist tax counsel for complex cases.
4. Tribunal Hearing
Hearing before a judge (and sometimes specialist members) where both sides present arguments and evidence. Hearings can be remote, in-person, or decided on papers without a hearing if both parties agree.
Duration: Simple cases 1-2 hours; complex cases 1-3 days
5. Decision & Costs
Written decision issued typically 4-8 weeks after hearing. Tribunal can uphold, reduce, or cancel the HMRC assessment. Each party normally bears own costs unless conduct has been unreasonable.
Further Appeal: Upper Tribunal (on point of law only) within 56 days
Before & After April 2025 Changes
Key rate changes affecting stamp duty disputes
| Aspect | Before April 2025 | From April 2025 |
|---|---|---|
| Nil-Rate Band | £250,000 | £125,000 |
| Additional Property Surcharge | 3% | 5% |
| Corporate Purchase Rate | 15% | 17% |
| Appeals Deadline | 30 days | 30 days (unchanged) |
| Overpayment Claim Window | 4 years | 4 years (unchanged) |
Dispute Volume Impact: The April 2025 rate increases, particularly the higher surcharge and reduced nil-rate band, are expected to significantly increase dispute volumes. Many buyers will challenge surcharge application and seek relief eligibility clarification. Expect longer processing times for internal reviews and tribunal hearings.
Closure Notices
Ending HMRC enquiries and challenging amended assessments
If HMRC opens an enquiry into your stamp duty return, they must issue a closure notice when the enquiry ends, stating their conclusions and any amendments to your assessment. You can apply to the tribunal to force HMRC to issue a closure notice if they're taking too long.
Your Rights
- Enquiry Time Limits: HMRC must normally open enquiries within 9 months of filing your return (or 12 months if late). No time limit for suspected deliberate tax evasion.
- Apply for Closure: If HMRC enquiry drags on beyond 12 months without clear progress, you can apply to the tribunal for a direction requiring them to issue a closure notice within a specified period.
- Appeal Amendments: You have 30 days from the closure notice date to appeal any amendments HMRC makes to your original return. Same process as appealing initial assessments.
- Partial Closure: HMRC can issue partial closure notices resolving some issues while continuing to enquire into others. You can appeal the resolved issues immediately.
Protecting Your Position
During enquiries, HMRC can request extensive documentation and information. Cooperate fully but keep detailed records of all correspondence. If HMRC requests seem unreasonable or irrelevant, you can apply to the tribunal to restrict the scope of information required. Consider engaging specialist advisers for complex enquiries.
Getting Professional Help
When to engage specialist tax advisers and legal counsel
While you can handle simple disputes yourself, complex cases often benefit from professional representation. Consider engaging specialists if your dispute involves significant sums, technical legal points, or if HMRC has launched a full enquiry.
Types of Professionals
Tax Advisers (Chartered)
Can handle most dispute resolution, including internal reviews and ADR mediation. Often most cost-effective for straightforward challenges.
Typical cost: £1,500-£5,000 per case
Specialist Tax Solicitors
Necessary for tribunal appeals and complex legal arguments. Can represent you at First-tier Tribunal hearings.
Typical cost: £5,000-£20,000+ per tribunal case
Tax Barristers
Specialist advocates for complex tribunal hearings, particularly cases involving novel legal points or high-value disputes.
Typical cost: £3,000-£15,000+ per hearing day
Property Valuers (RICS)
Essential if dispute centres on property valuation. Expert reports crucial for tribunal evidence when challenging HMRC valuations.
Typical cost: £2,000-£10,000 per expert report
Cost-Benefit Analysis
Professional fees can be substantial, so weigh costs against potential tax savings. As a rule of thumb, consider professional help if:
- Disputed amount exceeds £10,000
- The case involves complex technical or legal points
- HMRC has opened a formal enquiry with extensive information requests
- Your internal review or ADR attempt has failed
- The dispute may set a precedent affecting future transactions
Verify Your Stamp Duty Calculation
Use our calculators to check if your HMRC assessment is correct before challenging it
Calculate Your Stamp DutyEmma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.