What happens if HMRC sends an NSFU1 form directly to the buyer in a Stamp Duty refund claim?

Introduction

People often search for this issue when they have made, or are considering making, a Stamp Duty Land Tax refund claim on the basis that a property was not suitable for use as a dwelling at the effective date of purchase. A common practical problem is that HMRC may send the next-stage form, usually referred to as the NSFU1 form, directly to the claimant rather than to the adviser handling the case.

This matters because the form is part of HMRC’s fact-finding process. If it is completed badly, inconsistently, or without supporting evidence, it can damage the claim. It is therefore important to understand what the form is for, who receives it, and how it fits into the legal test for whether a property was genuinely not suitable for use as a dwelling.

The Question

A buyer and co-owner submitted a Stamp Duty refund claim through an adviser, arguing that the property was not suitable for use as a dwelling when it was bought. HMRC then changed its process so that the NSFU1 form would be sent directly to the claimant’s address rather than to the appointed agent.

The practical question is: if HMRC sends the NSFU1 form to the buyer personally, what should the buyer do, and does receiving that form mean the claim is likely to succeed?

Nick’s Explanation

Nick’s practical point was straightforward: where HMRC sends the NSFU1 form directly to the claimant, the claimant should not rush to complete and return it without first checking it carefully with the person preparing the case.

In anonymised form, the key message was:

HMRC may send the NSFU1 form only to the claimant rather than to the agent. If the form arrives, the claimant should not take action on it immediately. Instead, they should send a copy to the person handling the claim and follow guidance on how it should be completed.

That is sensible because NSFU claims usually depend on detailed factual evidence about the condition of the property at the date of purchase. The form needs to match the legal basis of the claim, the SDLT return position being amended, and the supporting documents such as surveys, photographs, invoices, contractor evidence, and any contemporaneous reports.

Receiving the form is not, by itself, a sign that HMRC accepts the claim. It usually means HMRC is reviewing it and wants fuller evidence before deciding whether the dwelling was genuinely not suitable for use.

The Law

The SDLT rules are found mainly in the Finance Act 2003. SDLT on residential property depends on whether the subject matter of the transaction includes a dwelling. In broad terms, if what is acquired is residential property, residential rates apply. If it is not residential property, non-residential or mixed rates may apply instead.

The key statutory provisions usually considered in these cases are:

• Finance Act 2003, section 55, which deals with the amount of tax chargeable
• Finance Act 2003, section 116, which defines “residential property”
• Finance Act 2003, Schedule 10, where relevant to claims and amendments

Under section 116, property is residential if it consists of or includes a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, together with land that forms part of its garden or grounds.

The phrase “suitable for use as a dwelling” has been heavily litigated. The courts have made clear that the test is an objective one. The question is not whether the buyer intended to renovate the property, nor whether it was unattractive, old, or in poor condition. The question is whether, at the effective date of the transaction, the property was suitable for use as a dwelling in the ordinary sense.

In an uninhabitable or not suitable for use case, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That authority reinforces that serious disrepair alone does not automatically prevent a building from being a dwelling for SDLT purposes. The court’s approach makes clear that many properties needing extensive works will still count as dwellings if they retain the basic character and functionality of a home.

Analysis

The position can be understood in stages.

First, a claim of this type usually argues that the property should not have been taxed as residential because it was not suitable for use as a dwelling at completion. That is often described in practice as an “uninhabitable” or “not suitable for use” claim, although the legal wording comes from the statute.

Second, HMRC may ask for more information after the claim is submitted. The NSFU1 form is part of that process. It is not the legal test itself. It is an administrative tool used by HMRC to gather facts.

Third, the form needs to be completed consistently with the evidence. Typical issues include:

• whether there was a functioning kitchen and bathroom
• whether there was safe access and basic security
• whether essential services such as water, electricity and drainage were available
• whether the structure was sound enough for ordinary residential occupation
• whether any defects were temporary, repairable, or so fundamental that the building could not realistically be used as a dwelling

Fourth, following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is demanding. A property may still be suitable for use as a dwelling even if it is in poor repair, requires major refurbishment, has dated features, or is unpleasant to live in. The courts are looking for something more serious: a condition that means the building is not truly suitable for residential use at the relevant date.

Fifth, that is why the NSFU1 form should not be treated as a routine questionnaire. Answers that overstate the defects can create credibility problems. Answers that understate them can undermine the legal basis of the claim. The best approach is to ensure the form is completed with reference to contemporaneous evidence from the purchase date.

Sixth, where there are joint buyers, HMRC may insist on authority from each claimant before corresponding through an agent or processing the claim. That is a procedural issue rather than a substantive one, but it can delay matters if the paperwork is incomplete.

Outcome

If HMRC sends the NSFU1 form directly to the buyer, the practical conclusion is simple: the buyer should send a copy to the person handling the claim and avoid responding in haste.

Receiving the form does not mean the refund has been approved. It usually means HMRC is examining the claim and wants fuller evidence. The success of the claim will depend on whether the property genuinely failed the “suitable for use as a dwelling” test at the effective date of purchase, applying the stricter approach now reinforced by Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Practical Steps

If you are in this position, the sensible next steps are:

1. Check who HMRC has sent the NSFU1 form to and note any deadline.
2. Send a copy immediately to the adviser or solicitor dealing with the claim.
3. Do not complete the form from memory alone if the purchase was some time ago.
4. Gather contemporaneous evidence from the transaction date, such as surveys, valuations, photographs, mortgage reports, contractor assessments and completion documents.
5. Make sure the answers on the form are consistent with the original claim and any SDLT amendment already submitted.
6. Where there are joint purchasers, make sure HMRC has the necessary signed authority from all claimants.
7. Review the evidence against the current legal threshold, bearing in mind that poor condition is not enough on its own.

If the property had serious defects but still retained the essential features of a dwelling, the claim may be weak. If, however, the defects were so fundamental that the building could not objectively be used as a home at completion, the claim may still be arguable.

Conclusion

An NSFU1 form sent directly to the buyer is mainly a procedural development, not a decision on the merits. The important point is to respond carefully and consistently. In not suitable for use cases, the legal threshold is now relatively high, especially after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, so the quality of the factual evidence is critical.

Legal References Used

• Finance Act 2003, section 55
• Finance Act 2003, section 116
• Finance Act 2003, Schedule 10
• 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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