Can HMRC reclaim SDLT after nine months, and how much SDLT is due if a company buys a property at non-residential rates?

Introduction

People often ask whether Stamp Duty Land Tax (SDLT) becomes untouchable once nine months have passed after filing the return. That question usually comes up where a buyer has used a lower SDLT treatment, such as non-residential or mixed-use rates, and wants to know whether HMRC can still challenge it later.

A related question is how to calculate SDLT if a company is buying a property and the purchase is said to qualify for non-residential rates. The answer depends on the statutory SDLT bands and on whether the transaction genuinely falls outside the residential rules.

The Question

A buyer asked two linked questions in a general purchase scenario:

• whether HMRC is prevented from reclaiming SDLT more than nine months after completion if the SDLT return was filed and the lower amount of tax was paid on time; and
• whether a company buying a property for £580,000 would pay £18,500 if the transaction properly qualified for non-residential SDLT rates.

Nick’s Explanation

Nick’s key point was that there is no absolute legal rule saying HMRC cannot revisit SDLT after nine months.

In anonymised form, his explanation was:

“The nine-month period is the normal enquiry window for HMRC to open an enquiry into a land transaction return. If no enquiry is opened in time, the return is generally treated as final and conclusive. But that does not create a complete bar in every case, because HMRC may still have discovery powers where insufficient tax has been assessed due to careless or deliberate behaviour.”

On the SDLT calculation, Nick confirmed that if a £580,000 purchase truly falls within the non-residential rates under Finance Act 2003, section 55, the SDLT would be £18,500.

The Law

The main statutory provisions are in Finance Act 2003.

Under Schedule 10, paragraph 12(1), HMRC generally has nine months from the filing date of the SDLT return to open an enquiry.

Under Schedule 10, paragraph 24(2), if HMRC does not open an enquiry within the allowed period, the return is generally treated as final and conclusive, subject to exceptions.

However, that is not the end of the matter. Under Schedule 10, paragraph 25, HMRC has discovery assessment powers in some cases. Those powers can apply where HMRC later discovers that too little tax was assessed and the under-assessment is linked to behaviour such as carelessness or deliberate inaccuracy.

As to the amount of SDLT, section 55 of Finance Act 2003 sets the charging rules and rate structure. For non-residential transactions, the rates are:

• 0% on the portion up to £150,000
• 2% on the portion from £150,001 to £250,000
• 5% on the portion above £250,000

Whether those rates apply depends on the true legal character of the land transaction. A property that is residential in law does not become non-residential simply because the buyer is a company or because a lower SDLT result is preferred.

Where a buyer argues that a dwelling was not suitable for use as a dwelling at the effective date of the transaction, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The Court of Appeal made clear that the condition test is demanding, and ordinary disrepair or the need for works will often not be enough.

Analysis

The issue can be broken down into two separate parts.

First, the nine-month point.

The common misunderstanding is that nine months creates a complete time bar. It does not. What it does create is the ordinary period in which HMRC may open an enquiry into the filed SDLT return. If HMRC does nothing within that period, the buyer is in a stronger position because the return is normally treated as final.

But “normally final” is not the same as “immune forever”. If HMRC later makes a valid discovery and the legal conditions for a discovery assessment are met, HMRC may still assess further tax. That is why it is safer to say that nine months is an important procedural milestone, not an absolute shield.

Second, the SDLT calculation.

If a transaction genuinely qualifies for non-residential treatment, the calculation on £580,000 is straightforward:

• first £150,000 at 0% = £0
• next £100,000 at 2% = £2,000
• remaining £330,000 at 5% = £16,500

Total SDLT: £18,500.

That arithmetic is correct. The real legal question is whether the transaction actually qualifies for non-residential rates.

If the subject matter is a house or other dwelling, the starting point is that it is residential property. A company buyer does not automatically obtain non-residential rates. Nor does the fact that works are planned after completion. If the argument is that the building was not suitable for use as a dwelling at completion, the buyer would need strong evidence. Following Mudan, the courts now apply a relatively high threshold in these “unsuitable for use” cases.

So there are two separate risks:

• the technical risk that the property does not qualify for non-residential treatment in the first place; and
• the procedural risk that HMRC may still challenge the return after nine months if a discovery assessment is available.

Outcome

The practical conclusion is:

• HMRC is not automatically barred from reclaiming SDLT after nine months; and
• £18,500 is the correct SDLT figure on a £580,000 purchase only if the transaction genuinely falls within the non-residential SDLT rules.

A buyer should therefore avoid relying on the idea that nine months gives complete protection. The safer approach is to make sure the SDLT treatment is legally supportable from the outset.

Practical Steps

If you are assessing a similar transaction, the sensible next steps are:

• check the exact nature of the property at the effective date of the transaction, not what it may become later;
• review whether the land includes any genuinely non-residential element or whether the transaction is truly mixed-use;
• if the argument is based on the dwelling being uninhabitable or unsuitable for use, gather strong contemporaneous evidence such as surveys, photographs, contractor reports and completion-date condition evidence;
• apply the high threshold now indicated by Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799;
• check the SDLT return filing date, because the enquiry window runs from filing, not simply from completion;
• do not assume that expiry of the enquiry window removes all risk, because discovery assessments may still be possible in the right circumstances; and
• recalculate SDLT using the correct statutory rates only after confirming the correct legal classification of the transaction.

Conclusion

Nine months is an important SDLT deadline, but it is not a complete defence against later HMRC action. And while £18,500 is the right non-residential SDLT calculation on £580,000, that figure only matters if the purchase really qualifies for non-residential treatment under Finance Act 2003.

Legal References Used

• Finance Act 2003, section 55
• Finance Act 2003, Schedule 10 paragraph 12(1)
• Finance Act 2003, Schedule 10 paragraph 24(2)
• Finance Act 2003, Schedule 10 paragraph 25
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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