What information does an insurer usually need from an SDLT advice firm seeking enquiry cover?

Introduction

Firms that advise on stamp duty land tax (SDLT) sometimes look for insurance against HMRC enquiries into tax positions they have recommended. A common question is what an insurer will want to know before deciding whether to provide that cover. In practice, the insurer will usually want a clear description of the advice being given, the type of clients involved, the level of commercial activity, and whether the arrangement is for the adviser alone or as part of a broader client offering.

The Question

An SDLT advisory firm was asked by a prospective insurer to provide more detail about the work it wanted insured. The firm’s practice was described in general terms as advising, mainly for corporate purchasers and property investors, on whether a property purchase may qualify for a lower SDLT charge because the property is mixed-use or because it was said to be uninhabitable at the effective date of the transaction. The firm also explained that its fees were linked to the SDLT savings achieved and gave a broad estimate of the typical annual turnover of its clients.

The practical issue was what information should be given to the insurer so that the insurer could assess the enquiry risk properly.

Nick’s Explanation

Nick’s explanation, put into public-facing form, was that the insurer needed a straightforward summary of the advisory work and the client base. In substance, the points provided were these:

• the firm was seeking cover for SDLT advice work;
• the advice typically concerned claims or positions involving mixed-use property and properties said to be uninhabitable;
• the clients were generally property investors, often using companies to acquire property;
• the clients were not mainly contractors or tradespeople;
• the adviser charged fees by reference to the tax saved through the SDLT analysis; and
• the adviser could give a broad indication of the typical level of client turnover.

A sensible public summary of Nick’s response is that an insurer will want to understand both the technical tax risk and the commercial profile of the clients. The more clearly the adviser explains the exact nature of the SDLT arguments being advanced, the easier it is for the insurer to decide whether the risk is insurable and on what terms.

The Law

The underlying tax issues arise under the SDLT rules in the Finance Act 2003. In broad terms:

• SDLT is charged on land transactions under Part 4 of the Finance Act 2003.
• The rate depends on the nature of the subject matter acquired, including whether the transaction is residential, non-residential, or mixed-use.
• Where a transaction includes both residential and non-residential property, or otherwise falls within the mixed-use rules, non-residential rates may apply.
• Arguments are sometimes made that a dwelling was not suitable for use as a dwelling at the effective date, so that the residential rates or residential treatment should not apply in the usual way.

For uninhabitable property arguments, the legal threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That decision makes clear that not every property in poor condition will fall outside residential treatment. The question is not whether the dwelling needs work, but whether the condition at the effective date is serious enough to meet the legal test. Minor disrepair, dated condition, or the need for renovation will usually not be enough.

Because these are technical and fact-sensitive SDLT issues, insurers considering enquiry cover will often focus closely on the legal basis of the advice, the evidence retained on file, and the types of claims or filing positions being supported.

Analysis

When an insurer asks what enquiries it is being asked to insure, it is usually trying to assess several separate risks.

First, it will want to know the precise tax work being done. SDLT advice on mixed-use transactions and allegedly uninhabitable dwellings is a specialist area that can attract HMRC scrutiny. An insurer will therefore want the adviser to say clearly whether the cover sought relates to:

• HMRC enquiries into filed SDLT returns;
• defence costs for disputed technical positions;
• cover for a portfolio of advised cases; or
• cover offered onward to the adviser’s own clients.

Secondly, it will want to know who the clients are. There is a material difference between insuring advice given to owner-occupiers, small landlords, developers, large corporate groups, or professional investors. A client base made up mainly of property investors and company purchasers tells the insurer something about transaction size, frequency, and likely enquiry profile.

Thirdly, the insurer will want some indication of scale. A broad estimate of client turnover, while not a legal test, helps the insurer understand the commercial size of the insured population. It may also ask for average transaction value, number of SDLT cases per year, and the proportion of cases involving mixed-use or uninhabitable arguments.

Fourthly, the fee model matters. If the adviser charges by reference to tax saved, the insurer may see that as relevant to risk selection and claims behaviour. It does not automatically prevent cover, but insurers often want transparency where a contingent or success-linked fee structure is used.

Fifthly, if there is a proposal to create a partnership arrangement under which the insurance is offered to the adviser’s clients, the insurer will want to know the distribution model. That includes whether the adviser is merely introducing clients, whether the adviser will be presenting the product as part of its service, and whether any regulated insurance distribution issues arise.

In the SDLT context, the strongest area of insurer concern is likely to be the technical strength of the underlying filing position. That is especially true for uninhabitable property cases. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the bar is now comparatively high. If the property was still recognisably a dwelling and could be made habitable by ordinary repair or refurbishment, the argument may be weak. An insurer is therefore likely to ask how such cases are screened, what evidence is obtained, and whether counsel’s opinion or a formal technical review is used in borderline matters.

For mixed-use cases, the insurer will similarly want to know how the adviser determines that non-residential elements are genuine and substantial enough to support mixed-use treatment under the legislation and case law, rather than being incidental to residential use.

Outcome

The practical conclusion is that an insurer in this area will usually expect a concise but technically accurate explanation covering:

• the exact SDLT risks for which cover is sought;
• the fact that the firm advises on mixed-use and uninhabitable property issues;
• the type of clients involved, such as property investors and company purchasers;
• the approximate commercial profile of those clients;
• the adviser’s fee structure; and
• whether the insurance is only for the adviser’s own risk or is intended to be offered to clients as part of a wider arrangement.

Where uninhabitable property advice is involved, it is important to explain that the legal threshold is now demanding and that cases are screened carefully in light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Practical Steps

If you are preparing a response to an insurer in this area, it is sensible to provide the following:

1. A short description of the advisory practice, for example that it provides specialist SDLT advice on mixed-use and condition-based residential classification issues.
2. A summary of the client base, such as property investors, landlords, developers, or companies acquiring property.
3. Approximate figures for annual case volume, average transaction value, and broad client turnover where requested.
4. An explanation of how fees are charged, including whether any element is linked to tax saved.
5. A note of the risk controls used, such as document review, valuation evidence, photographs, survey material, legal sign-off, or external counsel input.
6. A clear statement on whether you want cover only for your own professional exposure or whether you are proposing a client-facing insurance arrangement.
7. For any uninhabitable property work, confirmation that cases are reviewed against the stricter approach reflected in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

It is also wise to avoid vague descriptions. Insurers generally respond better to precise wording about the type of SDLT analysis undertaken and the evidence standards applied before advice is given.

Conclusion

An insurer considering enquiry cover for an SDLT advisory firm will want more than a general statement that the firm reduces SDLT liabilities. It will want to understand the technical basis of the advice, the nature of the clients, the scale of the work, and the controls used to manage contentious positions. That is particularly important for uninhabitable property cases, where the legal threshold is now relatively high after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Legal References Used

• Finance Act 2003, Part 4
• 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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