Can you appeal an SDLT closure notice and ask HMRC to postpone collection of the disputed tax?

Introduction

Readers often ask what happens after HMRC issues a closure notice in a Stamp Duty Land Tax (SDLT) enquiry. A common concern is whether the taxpayer can still challenge HMRC’s decision, whether the enquiry can be paused, and whether HMRC must continue collecting the disputed tax while the appeal is ongoing.

This issue commonly arises in claims that a property was not “suitable for use as a dwelling” at the effective date of the transaction, so that non-residential SDLT rates should have applied. It is especially important now because the legal threshold for showing that a property was uninhabitable is relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A taxpayer’s agent had been corresponding with HMRC during an SDLT repayment dispute. The case concerned whether a purchased property was residential or instead not suitable for use as a dwelling at the relevant date. HMRC later issued a closure notice rejecting the repayment claim, but the agent did not receive the notice promptly because HMRC had sent correspondence to an earlier address.

The practical questions were:

• Can the taxpayer still appeal the closure notice?
• Can the case be paused pending the outcome of the Mudan litigation?
• Can the taxpayer ask HMRC to postpone collection of the disputed SDLT while the appeal is determined?

Nick’s Explanation

Nick’s position, put in anonymised form, was that once HMRC had issued the closure notice, the enquiry itself could no longer simply be “paused” by agreement because the enquiry had ended. The correct next step was to appeal the closure notice.

He also explained that where the central legal issue was the meaning of “suitable for use as a dwelling”, the taxpayer could seek to have the appeal stood behind the relevant appellate authority. In substance, his reasoning was:

• the taxpayer should file a formal appeal against the closure notice issued under paragraph 11 of Schedule 11A to the Finance Act 2003;
• the taxpayer could ask for the disputed tax to be postponed under paragraph 16 of Schedule 11A FA 2003 pending determination of the appeal; and
• if a related appellate decision was likely to be determinative, the taxpayer could ask the First-tier Tribunal to stay the appeal under its case management powers.

HMRC then confirmed two important procedural points: first, that the appeal had been recorded; and second, that collection of the disputed tax would be postponed pending determination of the appeal.

The Law

The key statutory provisions are found in the Finance Act 2003.

Section 116 FA 2003 deals with what counts as residential property for SDLT purposes. Broadly, property is residential if it is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use.

Where HMRC opens an enquiry into an SDLT return amendment or repayment claim, Schedule 11A FA 2003 governs the procedure. In broad terms:

• paragraph 11 allows HMRC to issue a closure notice stating its conclusions and making any amendments required to give effect to those conclusions;
• once the closure notice is issued, the enquiry is closed;
• the taxpayer may appeal against the closure notice; and
• paragraph 16 provides a mechanism for postponement of the tax in dispute pending the outcome of the appeal.

In disputes about whether a property was suitable for use as a dwelling, the leading authorities have considered the condition of the property at the effective date of the transaction. The Court of Appeal in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 has now made clear that the threshold is relatively high. Serious disrepair, defects, or the need for renovation will not automatically mean that a property was not suitable for use as a dwelling. The question is not whether the property was attractive, modern, mortgageable, or ready for immediate comfortable occupation, but whether it crossed the legal line into being unsuitable for use as a dwelling.

Analysis

The procedural position can be analysed in stages.

1. HMRC issued a closure notice. That matters because a closure notice ends the enquiry. After that point, the dispute moves from enquiry stage to appeal stage.

2. Because the enquiry had ended, there was no longer any real scope for HMRC simply to “pause” the enquiry. HMRC was right, as a matter of procedure, to say that the enquiry was over once the closure notice had been issued.

3. The taxpayer’s remedy was therefore to appeal the closure notice within the applicable time limit. If correspondence had been misdirected and the notice was received late, that may be relevant to whether a late appeal should be admitted, but the safest course is always to appeal as soon as possible once the notice comes to light.

4. If the substantive issue in the appeal overlaps with a pending or recent appellate decision, the taxpayer may ask the tribunal to stay the appeal. That is a case management question for the tribunal, not a reason for HMRC to keep the enquiry open.

5. At the same time, the taxpayer may ask for postponement of the disputed tax under paragraph 16 of Schedule 11A FA 2003. In this case, HMRC confirmed that collection would be postponed pending determination of the appeal. That is a practical and important step because it prevents enforcement of the disputed amount while the appeal is unresolved, although interest issues may still need to be considered separately.

6. On the substantive SDLT issue, any taxpayer arguing that a property was not suitable for use as a dwelling must now assess the case with particular care in light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The threshold is now relatively high. Evidence of hazards, defects, disrepair, or refurbishment needs will not by itself be enough unless the condition at the effective date truly meant the property was not suitable for use as a dwelling within section 116(1)(a) FA 2003.

Outcome

The practical conclusion is straightforward:

• once HMRC has issued an SDLT closure notice, the enquiry cannot simply be paused because the enquiry has ended;
• the taxpayer should appeal the closure notice if they wish to challenge HMRC’s decision;
• the taxpayer can ask for postponement of collection of the disputed tax pending determination of the appeal; and
• if a related authority is relevant, the taxpayer may ask the First-tier Tribunal to stay the appeal.

However, on the underlying “not suitable for use as a dwelling” argument, taxpayers should proceed carefully because the Court of Appeal in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 has set a relatively demanding standard.

Practical Steps

• Check the date of the closure notice and the appeal deadline immediately.
• If the notice was sent to the wrong address or received late, gather evidence showing when and how it was actually received.
• Submit a formal appeal against the closure notice without delay.
• Request postponement of the disputed tax under paragraph 16 of Schedule 11A FA 2003.
• If there is a relevant appellate authority affecting the same point of law, consider applying to the First-tier Tribunal for a stay.
• Review the factual evidence on the property’s condition at the effective date, including surveys, photographs, contractor reports, and any evidence of health and safety hazards.
• Test that evidence against the current legal position after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, bearing in mind that the threshold for proving unsuitability is now relatively high.

Conclusion

If HMRC issues an SDLT closure notice, the dispute moves into the appeal process. The right course is to appeal, ask for postponement of the disputed tax, and if appropriate seek a tribunal stay. But anyone relying on a claim that the property was not suitable for use as a dwelling must now assess that argument against the stricter approach confirmed in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Legal References Used

• Finance Act 2003, section 116
• Finance Act 2003, Schedule 11A, paragraph 11
• Finance Act 2003, Schedule 11A, paragraph 16
• Mudan v HMRC [2024] UKUT 307 (TCC)
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

See all questions and answers categorized in this sitemap. Or use Google site search below.