Can SDLT Be Reclaimed Where a Purchase Included a Boatyard and a House That May Have Been Uninhabitable?

Introduction

Buyers sometimes discover after completion that Stamp Duty Land Tax (SDLT) may have been calculated on the wrong basis. A common issue is where one purchase included both residential and non-residential land, but the whole transaction was treated as residential. Another issue is whether a dwelling was so defective at the date of purchase that it was not suitable for use as a dwelling at all.

These points matter because mixed-use and non-residential transactions are taxed at different SDLT rates, often producing a much lower charge than residential rates. But the legal tests are technical, and recent case law has made it harder to argue that a property was not suitable for use as a dwelling.

The Question

A buyer completed the purchase of a riverside property some time ago. The acquisition included two separate titles: one title for a dwelling and another title for a boatyard or commercial yard with no residential planning status. SDLT was submitted on the basis that the whole transaction was residential.

After completion, the buyer questioned whether that was correct. The buyer’s position was that:

• the boatyard was a separate title and was commercial in character;
• a substantial part of the overall value was attributed to the boatyard; and
• the dwelling had serious defects at the effective date of the transaction, including removal of the heating system and bathroom fittings, so it may not have been habitable.

The practical question is whether SDLT may have been overpaid and, if so, whether a reclaim is still possible within the applicable time limit.

Nick’s Explanation

Nick’s main view was that the separate title for the boatyard helps significantly with a mixed-use argument. In anonymised form, his reasoning was:

“It helps that the boatyard is under separate title, because that makes it far more arguable that this is a commercial enterprise and not part of the residential property.”

He also identified an important evidential point: if the buyer wants to argue that the transaction should have been taxed as mixed-use, there should ideally be a third-party valuation showing the value of the boatyard and the dwelling as separate parcels at the time of purchase.

On the state of the dwelling, Nick considered that there was at least an arguable case that it was not habitable at the time of purchase, but he also warned that HMRC might challenge that conclusion. In anonymised form, he said:

“The property is arguably not habitable at the time of purchase, but HMRC may contest that assertion. We would need solid evidence showing the property was not habitable at that date.”

He also noted the procedural point that where the normal amendment period has passed, a buyer may still be able to pursue a claim within four years of the effective date of the transaction, depending on the nature of the error and the statutory limits in Schedule 10 to Finance Act 2003.

The Law

SDLT is charged under Finance Act 2003. The key question is how the subject matter of the transaction is properly classified at the effective date of the transaction.

Broadly:

• Residential rates apply where the main subject matter consists of residential property.
• Non-residential rates apply to non-residential property.
• Mixed-use rates apply where the transaction includes both residential and non-residential property.

The statutory framework is found mainly in Finance Act 2003, especially section 55 and the definitions of residential property in section 116.

A property can count as residential property if it is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use. The phrase “suitable for use as a dwelling” has generated a large amount of litigation.

Where a buyer says that a building was uninhabitable, the courts do not apply a loose or impressionistic test. The recent authority of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 confirms that the threshold is now relatively high. Serious disrepair is not enough by itself. The question is whether, at the effective date, the property had truly ceased to be suitable for use as a dwelling. That is a demanding test.

As to time limits, amendments to an SDLT return are usually governed by Finance Act 2003, Schedule 10, paragraph 6. Relief for overpayment caused by a mistake may in some cases be claimed under Schedule 10, paragraphs 34 and 34B, subject to strict limits. HMRC guidance in SDLTM54000 onwards is relevant, but the statute controls the position.

Analysis

The analysis normally has two separate limbs.

First, was the transaction mixed-use?

If the purchase included a separate title used as a boatyard or commercial yard, with no residential planning status and no real residential function, that is a strong indicator that the transaction included non-residential property. A separate title is not legally conclusive on its own, but it is helpful evidence that the land was distinct in character and use.

If the boatyard formed part of the same contract and same completion, the transaction may still be one land transaction for SDLT purposes, but one with mixed subject matter. If so, mixed-use rates may apply to the whole chargeable consideration.

Evidence that would strengthen that argument includes:

• title documents showing separate legal parcels;
• planning records confirming non-residential status for the yard;
• photographs and plans showing the yard’s commercial nature;
• evidence of actual business or storage use; and
• a retrospective valuation apportioning the value between the dwelling and the yard.

Second, was the dwelling unsuitable for use as a dwelling?

This is the harder argument. A missing heating system and removed bathroom fittings may sound serious, but after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition thresholds are now relatively high. The fact that a property is unpleasant, in disrepair, or expensive to restore does not necessarily mean it is not suitable for use as a dwelling.

The buyer would need evidence focused on the exact condition at completion, not later deterioration and not estate agent marketing language. Useful evidence could include:

• a survey or engineer’s report from the time, if one exists;
• dated photographs showing the removed systems and fittings;
• contract papers, replies to enquiries, or completion documents referring to the condition;
• invoices or contractor reports showing immediate remedial works; and
• witness evidence from those who inspected the property at the relevant date.

Even with that evidence, HMRC may still argue that the building remained a dwelling in law. So, in a case like this, the mixed-use argument is often stronger than the uninhabitable dwelling argument.

Third, is a reclaim still in time?

If the effective date of the transaction was within four years, there may be scope to claim relief from overpayment caused by a mistake in the return, depending on the precise procedural route. The one-year amendment window is different from the four-year mistake-relief window, and the distinction matters. The exact drafting of the original return, and whether the issue is characterised as a factual mistake, legal mistake, or failure to make a claim, can affect whether the claim succeeds.

That is why Nick’s point about checking the procedural basis with HMRC was sensible. The substantive SDLT argument may be sound, but a claim can still fail if the wrong statutory route is used or the time limit has expired.

Outcome

The practical conclusion is that there may be a credible SDLT reclaim where a purchase included a separate commercial boatyard but was taxed wholly at residential rates. On these facts, the mixed-use argument appears stronger than the argument that the dwelling was not suitable for use as a dwelling.

A claim based on the dwelling being uninhabitable should be approached cautiously. 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.

If the claim is still within the statutory time limit, a buyer should focus on objective evidence of the boatyard’s non-residential character and, if relevant, robust evidence of the dwelling’s actual condition at completion.

Practical Steps

• Obtain the SDLT return, SDLT5 certificate, contract, transfer documents and completion statement.
• Check the effective date of the transaction and calculate whether the one-year amendment period or four-year mistake-relief period is still open.
• Gather title documents showing the separate legal title for the boatyard or yard.
• Collect planning and use evidence confirming that the yard was non-residential.
• Instruct a suitably qualified valuer, ideally a RICS surveyor, to provide a retrospective valuation of the separate parcels as at the purchase date.
• If relying on condition, gather dated photographs, contractor records, surveys and any contemporaneous evidence showing the dwelling’s state at completion.
• Review whether the reclaim should be framed primarily as a mixed-use claim, with any uninhabitable-dwelling point advanced only if the evidence is strong enough.
• Ensure the claim is made under the correct statutory mechanism in Finance Act 2003, Schedule 10.

Conclusion

Where a purchase included both a dwelling and a genuinely non-residential boatyard on a separate title, there may be a good argument that SDLT should have been charged at mixed-use rates rather than residential rates. A separate-title commercial parcel is often powerful evidence. By contrast, arguing that the dwelling was not suitable for use as a dwelling is now more difficult, because the legal threshold is high after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. In most cases, the strength of the claim will depend on the documents, the valuation evidence and whether the claim is still within time.

Legal References Used

• Finance Act 2003, section 55
• Finance Act 2003, section 116
• Finance Act 2003, Schedule 10, paragraph 6(3)
• Finance Act 2003, Schedule 10, paragraphs 34 and 34B
• F(No 3)A 2010, section 28 and Schedule 12
• HMRC Stamp Duty Land Tax Manual, SDLTM54000 to SDLTM54120
• 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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