Can an SDLT refund claim be put on hold pending the Mudan Court of Appeal decision?

Introduction

Readers often ask what to do when HMRC is reviewing a Stamp Duty Land Tax claim and there is a relevant court appeal underway. A common example is a claim based on a property being uninhabitable at the effective date of purchase. In that situation, the question is whether HMRC should be asked to pause or review the case until the higher court has ruled.

This issue became especially important in light of the litigation culminating in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, which addressed the legal test for whether a dwelling is suitable for use as a dwelling for SDLT purposes.

The Question

A taxpayer had an ongoing dispute with HMRC about an SDLT position, apparently involving whether a property qualified as residential or non-residential because of its physical condition at completion. HMRC had issued its view of the matter. The adviser considered the position and decided to ask for a review, and also asked whether the case could be stayed or effectively put on hold until the Court of Appeal gave judgment in the Mudan appeal.

Nick’s Explanation

Nick’s response, in anonymised form, was that after reviewing HMRC’s correspondence and considering the appeal hearing in Mudan, he had decided to request a review and ask whether the case could be stayed pending the Court of Appeal’s judgment.

The key point in that reasoning is straightforward: where a live appeal is likely to clarify the legal test that directly affects the taxpayer’s position, it can be sensible to ask HMRC not to force a final decision before that authority is available. That is particularly so in uninhabitable property cases, where the legal threshold has been contested and refined by the courts.

The Law

SDLT is charged under the Finance Act 2003. Whether property is taxed as residential or non-residential depends on the statutory definitions in that Act, including the meaning of a “dwelling”.

The core statutory provisions usually considered in these disputes are:

• Finance Act 2003, section 43
• Finance Act 2003, section 55
• Finance Act 2003, section 116

Section 116 is especially important because it deals with the meaning of “residential property” and includes property that 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.

In practice, disputes often arise where a buyer says the property was in such poor condition at completion that it was not suitable for use as a dwelling, so the purchase should not be treated as wholly residential.

The courts have considered this in a line of cases, including:

• Mudan v HMRC in the tribunal stages, culminating in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• PN Bewley Ltd v HMRC [2019] UKFTT 65 (TC)
• Hyman v HMRC [2019] UKFTT 469 (TC)

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for showing that a property was not suitable for use as a dwelling is now relatively high. The fact that a property needs work, even significant work, will not by itself be enough. The condition generally has to be such that the building cannot realistically be used as a dwelling at the effective date of the transaction.

Analysis

The analysis usually has four stages.

1. Identify the issue in dispute

   The first question is whether HMRC is challenging a claim that the property was not residential because it was uninhabitable or otherwise not suitable for use as a dwelling.

2. Check whether a pending case is legally relevant

   If there is a live appeal dealing with the same legal test, it may materially affect the outcome. That was the position with Mudan, because it concerned the meaning of suitability for use as a dwelling in the SDLT context.

3. Consider procedure

   A taxpayer can ask HMRC for a statutory review of an appealable decision. Separately, if tribunal proceedings are underway or likely, a party can ask for a stay in appropriate circumstances. Even before that stage, it may be reasonable to invite HMRC to hold off from pressing the matter until a higher court has clarified the law.

4. Apply the updated legal threshold

   After Mudan in the Court of Appeal, the bar is relatively high. Many properties that are run-down, in disrepair, lacking modern facilities, or requiring refurbishment may still count as suitable for use as a dwelling. The question is not whether the property is attractive, mortgageable, or convenient to live in. The question is whether, viewed realistically at the effective date, it was suitable for use as a dwelling within the statutory test.

That means a request to pause the case pending Mudan was procedurally sensible at the time, because the appeal could affect the legal test to be applied. But once Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 has been handed down, the taxpayer’s substantive argument must be reassessed against that stricter threshold.

Outcome

The practical answer is this: if HMRC is reviewing an SDLT claim and a higher court decision is imminent on the same legal issue, it can be sensible to ask for a review and to request that the matter be stayed or held pending that judgment.

However, for uninhabitable or not suitable for use cases, readers should now assume that the threshold is relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. A property will not fall outside the dwelling definition merely because it was in poor condition or required substantial works.

Practical Steps

1. Read HMRC’s decision or view of the matter carefully

   Work out exactly what legal point HMRC is disputing.

2. Check procedural deadlines

   If there is a right to request a review or appeal, make sure the deadline is not missed.

3. Gather evidence of the property’s condition at the effective date

   This may include photographs, survey reports, contractor evidence, utility status, and contemporaneous correspondence.

4. Test the evidence against the current law

   Ask whether the evidence shows genuine unsuitability for use as a dwelling, not just disrepair or a need for renovation.

5. If a relevant appeal is pending, consider asking for a pause

   If the law is unsettled and a higher court decision is expected shortly, a request for a stay or for HMRC to defer action may be appropriate.

6. Reassess after any new authority

   Once the court has ruled, revisit the merits promptly. In uninhabitable property cases, Mudan now needs to be at the centre of that analysis.

Conclusion

Where HMRC is considering an SDLT dispute and a relevant appeal is pending, asking for a review and a stay can be a sensible step. But in claims based on a property being uninhabitable or not suitable for use as a dwelling, the legal threshold is now relatively demanding after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Any claim should be tested against that higher standard.

Legal References Used

• Finance Act 2003, sections 43, 55 and 116
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• PN Bewley Ltd v HMRC [2019] UKFTT 65 (TC)
• Hyman v HMRC [2019] UKFTT 469 (TC)

This page was last updated on 22 March 2026.

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