Has HMRC attached the SDLT compliance letters, and what does a behavioural penalty mean?

Introduction

People often search for this issue after receiving an HMRC email about a Stamp Duty Land Tax (SDLT) repayment claim or relief claim. A common problem is that the email refers to earlier letters and factsheets, but the taxpayer cannot tell whether the attachments were actually included when the message was forwarded. Another concern is HMRC’s statement that it may charge a behavioural penalty if the claim is found to be incorrect.

This article explains, in general terms, what that kind of HMRC email means, what documents matter, and how a taxpayer should respond if HMRC has opened an SDLT compliance check.

The Question

A taxpayer forwarded an HMRC email about an SDLT compliance check. HMRC said it had attached:

• an opening notice and schedule of information,
• a findings letter and meeting request, and
• a chaser letter for the meeting request.

HMRC also referred to factsheets and said it was now too late to withdraw the claim because the compliance process had started and a closure notice would have to be issued. The taxpayer wanted to know whether those documents were actually attached to the forwarded email, and what HMRC meant by saying that a behavioural penalty might apply even though the SDLT had originally been paid in full.

Nick’s Explanation

Nick’s key point was simple: the forwarded email text referred to attachments, but the attachments themselves were not visible in the material provided. In substance, his response was that the taxpayer needed the actual attached documents, not just the email wording saying they existed.

That is an important distinction. When an email says “I have attached copies of the letters we have issued so far”, that does not prove the attachments were included in the forwarded copy. A forwarded email often carries over the text but not the files.

Nick therefore focused on obtaining the missing documents first, because they are likely to contain:

• HMRC’s reasons for doubting the SDLT claim,
• the specific information and evidence requested,
• the procedural stage of the check, and
• the basis on which HMRC is considering a penalty.

Without those documents, it is difficult to assess the strength of HMRC’s position or prepare a proper response.

The Law

SDLT is governed mainly by the Finance Act 2003. HMRC can open a compliance check into an SDLT return or into an amendment or repayment claim. Where HMRC concludes that a claim is wrong, it may issue a closure notice setting out its conclusions and any amendment required.

Penalties are separate from the tax itself. A taxpayer can have paid the original SDLT in full and still face a penalty if they later made an incorrect repayment claim, relief claim, amendment or return that led to an inaccurate tax position. The relevant penalty rules are found in Schedule 24 to the Finance Act 2007, which deals with penalties for inaccuracies in documents given to HMRC.

Under Schedule 24, the level of penalty depends heavily on behaviour. Broadly, HMRC considers whether the inaccuracy was:

• careless,
• deliberate, or
• deliberate and concealed.

The amount can then be reduced depending on the quality of the taxpayer’s disclosure and cooperation, including:

• telling HMRC about the issue,
• helping HMRC understand it, and
• giving HMRC access to records and supporting material.

HMRC factsheets used in compliance checks commonly explain these rights and obligations, including the possibility of penalties and the taxpayer’s right to make representations before a final decision is made.

Analysis

The practical analysis usually breaks down into four parts.

First, check whether the attachments are actually present. If the forwarded material only reproduces the email body and lists the attachments by name, that does not mean the files were sent on successfully. In most cases, if the files were attached, they would appear separately in the email chain or as downloadable documents. If they do not, the taxpayer should assume they are missing and ask for them.

Second, understand why HMRC says it is too late to withdraw the claim. Once HMRC has opened a formal compliance check and progressed it to findings, it may take the view that it must complete the process by issuing a closure notice. That does not necessarily mean the taxpayer has no room to improve the outcome. It means the matter has moved beyond an informal retraction. The taxpayer can still provide evidence, explain the background, correct misunderstandings, and make representations on both the substantive SDLT issue and any penalty.

Third, understand the penalty point. HMRC is not saying that paying the original SDLT protects a person from penalty in every case. If a later claim sought repayment or relief on an incorrect basis, HMRC may treat that as an inaccuracy in a document given to HMRC. The penalty question then becomes behavioural: was the claim made carelessly, or was there a reasonable basis for it? Was the taxpayer relying on someone else? Did they check the facts? Did they withdraw or correct matters promptly when concerns arose? These details matter.

Fourth, gather the underlying legal and factual basis for the claim. In many SDLT refund cases, the dispute concerns whether the property was unsuitable for use as a dwelling at the effective date of the transaction. If that is the issue, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. A property will not usually be treated as non-residential merely because it needed repairs, modernisation, or significant works. The condition must be serious enough to take it outside the concept of a dwelling for SDLT purposes. That makes the contemporaneous evidence especially important, such as surveys, photographs, contractor reports, mortgage valuation material, and evidence of actual physical condition at completion.

Outcome

The practical conclusion is:

• the forwarded email text does not by itself show that the HMRC attachments were included,
• the taxpayer needs the actual opening notice, findings letter, chaser letter and factsheets,
• HMRC can still pursue a behavioural penalty even if the original SDLT was paid in full, if the later claim was inaccurate, and
• the taxpayer should respond promptly and substantively rather than assuming the matter can simply be abandoned.

Practical Steps

A taxpayer in this position should usually do the following:

1. Obtain the missing attachments from HMRC or from the original sender.
2. Read the opening notice and schedule carefully to identify exactly what HMRC is checking.
3. Read the findings letter to see HMRC’s provisional conclusions and the reasons behind them.
4. Check the deadline for providing documents and meeting confirmation.
5. Prepare a chronology of what happened, including who made the claim, on what basis, and what the taxpayer understood at the time.
6. Collect all contemporaneous evidence relevant to the SDLT position.
7. If the claim involved alleged uninhabitability or unsuitability for use as a dwelling, test the facts against the stricter approach reflected in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.
8. Address the penalty issue separately by explaining the taxpayer’s behaviour, the source of any misunderstanding, and the extent of cooperation.
9. Attend the findings meeting if one has been offered, provided the taxpayer is properly prepared.

If the documents show HMRC is relying on a specific legal basis, the response should deal with that basis directly rather than making general fairness points.

Conclusion

If an HMRC email says documents were attached, but the forwarded message does not show them, the safe assumption is that the attachments are missing. Those documents are essential because they explain both HMRC’s SDLT challenge and the possible penalty position. A taxpayer should obtain them immediately, respond within the deadline, and address both the substantive SDLT issue and the behavioural penalty issue with evidence and clear explanations.

Legal References Used

• Finance Act 2003
• Finance Act 2007, Schedule 24
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• HMRC factsheets CC/FS1a, CC/FS7a and CC/FS9

This page was last updated on 22 March 2026.

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