Can an HMRC SDLT review be stayed while waiting for a Court of Appeal decision on whether a property is suitable for use as a dwelling?

Introduction

Readers often search for this issue when HMRC has challenged a Stamp Duty Land Tax claim on the basis that a property was still “suitable for use as a dwelling” at the effective date of the transaction. A common question is whether a taxpayer should ask for a statutory review and, if so, whether that review can be paused while an important appeal case is pending.

This matters because the answer can affect whether residential SDLT rates apply, whether a refund claim succeeds, and how a dispute with HMRC should be managed. It also matters because the legal threshold for showing that a property was not suitable for use as a dwelling is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A taxpayer received an HMRC closure notice in an SDLT dispute about a property purchase. The issue was whether the property, although said to be unsafe or unfit for immediate occupation, was nevertheless still “suitable for use as a dwelling” for the purposes of section 116 Finance Act 2003.

The taxpayer wished to accept HMRC’s offer of a statutory review but also wanted the review to be opened and then stayed until the Court of Appeal had given judgment in the pending Mudan appeal, because that case concerned the same legal question.

Nick’s Explanation

Nick’s position was that the taxpayer should accept the statutory review in time, but ask HMRC to pause the review pending the Court of Appeal’s decision on the same point of law.

In anonymised form, his reasoning was:

The taxpayer accepts the offer of a statutory review of the closure notice. Because the precise legal issue in dispute—whether a property that is unsafe or unfit for immediate occupation can still be “suitable for use as a dwelling” under section 116 Finance Act 2003—was before the Court of Appeal, it was sensible to ask that the review be opened but immediately stayed until judgment was handed down. That would avoid duplicated work and help ensure the review was carried out in line with authoritative guidance from the appellate court.

HMRC later confirmed that the review request had been received. The practical point is that a taxpayer should not miss the deadline for requesting a review merely because a higher court decision is awaited. The safer course is usually to preserve the review right first, then ask for a stay.

The Law

The key SDLT provision is section 116 Finance Act 2003. Broadly, it defines “residential property” and includes property that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use.

If a building is “suitable for use as a dwelling” at the effective date of the transaction, that usually means the property is residential for SDLT purposes. That classification can affect:

• whether residential rates apply;
• whether the higher rates for additional dwellings may apply;
• whether a claim based on the property being non-residential is likely to fail.

Where HMRC issues a closure notice or other appealable decision, the taxpayer may usually choose either:

• to appeal to the tribunal; or
• to require HMRC to carry out a statutory review.

The review process exists under the tax appeal framework in the Taxes Management Act 1970 as applied to SDLT disputes. A review is an internal reconsideration by HMRC of the disputed decision. It must be requested within the relevant time limit. Missing that deadline can seriously prejudice the taxpayer’s position.

On the substantive dwelling issue, case law has developed the meaning of “suitable for use as a dwelling”. The courts have repeatedly treated this as a practical, objective test applied at the effective date of the transaction. The question is not simply whether the property needs work, nor whether the buyer intended major renovation, but whether the building remained suitable for dwelling use in the real world at that time.

In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That decision makes clear that serious disrepair, lack of modernisation, or the need for substantial works will not automatically prevent a property from being suitable for use as a dwelling.

Analysis

The position can be analysed in two parts: procedure and substance.

First, the procedural point. If HMRC has issued a closure notice or similar appealable decision, the taxpayer must protect their position within the statutory time limit. If HMRC offers a statutory review, accepting that offer in time is often sensible where:

• the dispute turns on a developing legal issue;
• there is a pending higher court authority that may directly affect the outcome;
• the taxpayer wants HMRC to reconsider without immediately starting tribunal proceedings.

Asking for the review to be stayed does not replace the need to request the review itself. The request should be made first. Once the review right is preserved, the taxpayer can ask HMRC to pause the process pending the higher court judgment.

Second, the substantive SDLT point. The taxpayer’s argument was that a property that was unsafe or unfit for immediate occupation was not suitable for use as a dwelling. Historically, some taxpayers advanced this argument where the property had major defects, lacked basic facilities, or required extensive repair.

However, the modern authorities show that this is a difficult argument unless the defects are very serious indeed. The court looks at the actual state of the property at completion and asks whether, objectively, it remained suitable for residential use. The fact that occupation would be inconvenient, undesirable, or delayed does not necessarily mean the property ceased to be a dwelling.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is relatively high. In practice, a taxpayer now needs strong evidence that the building had crossed the line from poor condition into genuine unsuitability for use as a dwelling. Evidence may include:

• survey reports prepared close to completion;
• photographs showing the property’s actual condition on the effective date;
• evidence of structural danger or legal prohibition on occupation;
• evidence that key features necessary for dwelling use were absent or non-functional in a serious way;
• documents showing that the defects existed at completion, not just after works began.

If the pending appeal concerns the same legal test, there is a sensible case for asking HMRC to stay the review. That can avoid the review being decided under a legal approach that may shortly be clarified or corrected by the Court of Appeal.

That said, once the Court of Appeal has ruled, the taxpayer’s prospects must be reassessed realistically. If the facts show only disrepair, outdated condition, or the need for refurbishment, a challenge based on unsuitability is now harder to sustain.

Outcome

The practical conclusion is this:

• if HMRC offers a statutory review, request it within the deadline;
• if a directly relevant appellate case is pending, ask HMRC to open the review and then stay it;
• do not assume that a property was not suitable for use as a dwelling just because it was in poor condition or not ready for immediate occupation;
• after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for proving unsuitability is relatively high.

Practical Steps

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

1. Check the deadline in HMRC’s letter and make sure any review request or appeal is made in time.
2. Identify the exact legal issue in dispute. Is it the meaning of “suitable for use as a dwelling” under section 116 Finance Act 2003, or something else?
3. Gather contemporaneous evidence of the property’s condition at the effective date of the transaction.
4. Compare your facts carefully with the reasoning in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 and any other relevant authorities.
5. If a higher court decision is pending on the same issue, ask HMRC in writing to stay the review pending judgment.
6. Keep the request focused and procedural: preserve the review right first, then explain why a stay would save time and ensure consistency with the appellate authorities.
7. Once the new judgment is available, reassess the merits promptly rather than relying on earlier assumptions about habitability or disrepair.

Conclusion

A taxpayer can sensibly ask HMRC to stay a statutory review where a pending appellate case will likely determine the same SDLT issue. But the review must still be requested in time. On the underlying dwelling question, the law now sets a demanding threshold: after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, only genuinely serious cases are likely to show that a property was not suitable for use as a dwelling.

Legal References Used

• Finance Act 2003, section 116
• Taxes Management Act 1970, statutory review framework as applied to tax appeals
• 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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