Can you still make an SDLT refund claim for an uninhabitable property after Mudan?

Introduction

Many buyers search for answers on whether they can reclaim Stamp Duty Land Tax (SDLT) after buying a property said to be uninhabitable. The issue usually arises where the buyer paid residential SDLT rates on completion and later wants to argue that the building was not suitable for use as a dwelling at the effective date of the transaction.

The difficulty is that this area has become much stricter. HMRC has challenged large numbers of claims, and the courts have narrowed the circumstances in which a property will count as unsuitable for use as a dwelling. In particular, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

The underlying question was whether a self-service SDLT reclaim model for allegedly uninhabitable properties was still viable after HMRC referred to the Mudan litigation and warned that claims clearly contrary to that decision could expose taxpayers to penalties.

Put more generally, the issue is this: if a property needs extensive repairs, can a buyer still submit a claim that it was not suitable for use as a dwelling, or has the case law effectively closed off most such claims?

Nick’s Explanation

Nick’s concern was whether HMRC’s stance on Mudan had effectively “killed” this type of claim, or whether claims might still be possible for properties in very poor condition.

The response he received was that claims could, at that stage, potentially be submitted on a protective basis while the litigation position developed, so that a taxpayer did not miss the statutory time limit for amending or reclaiming SDLT. The practical thinking was that if a final decision later went in the taxpayer’s favour, an earlier protective claim might preserve the point.

Nick then indicated that he was putting cases “on ice” pending clearer answers. That is a sensible reaction in a fast-moving and high-risk area, because a claim made without strong factual support can lead not only to refusal and repayment, but also to interest and potentially penalties.

The key public-facing point is that a buyer should not assume that “needs renovation” means “not suitable for use as a dwelling”. After Mudan, that is no longer a safe assumption.

The Law

SDLT is charged under the Finance Act 2003. The amount payable depends in part on whether the subject matter acquired is residential property, non-residential property, or mixed property.

For these purposes, a building counts 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 key statutory provision is section 116 of the Finance Act 2003.

In disputes of this kind, the question is usually whether, at the effective date of the transaction, the building was suitable for use as a dwelling. That is a fact-sensitive question, but it is judged objectively. The issue is not simply whether the buyer intended to refurbish it, whether it was unattractive, or whether mortgage lenders might have concerns. The legal test asks whether the property, viewed realistically, was suitable for use as a dwelling at that date.

HMRC also has enquiry powers in relation to SDLT returns and amendments, and where a repayment has been issued it may investigate and seek repayment if the claim was wrong. Depending on the procedural route used, timing rules are critical. That is why some advisers historically referred to “protective” claims where the law was unsettled.

Analysis

The analysis usually has to be done in stages.

First, identify the legal issue correctly. The question is not whether the property was in poor condition, in disrepair, or in need of extensive works. The question is whether it was unsuitable for use as a dwelling on the effective date of the purchase.

Second, gather the right evidence. Relevant material may include the contract papers, transfer, completion statement, survey reports, photographs, video evidence, builder reports, utility condition, environmental issues, and any evidence showing whether basic living functions were realistically possible at completion.

Third, separate serious defects from ordinary renovation issues. A dwelling can still be “suitable for use” even if it has outdated fittings, damp, defective décor, missing kitchen units, an old boiler, roof issues, or a need for substantial expenditure. The courts have repeatedly shown that disrepair alone does not necessarily stop a building being a dwelling.

Fourth, apply the modern case law. The threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. In practical terms, that means only more extreme cases are likely to succeed. The fact that a property needs major works, or would not be attractive to an ordinary buyer without renovation, does not by itself take it outside the residential SDLT rules.

Fifth, consider HMRC risk. If a claim is made and HMRC opens an enquiry, it may ask for detailed evidence and legal justification. If HMRC concludes that the property was in fact suitable for use as a dwelling, it can deny the refund or require repayment of any sum already repaid, usually with interest. If a claim is made despite clear authority against it, penalty exposure may also need to be considered.

Sixth, think carefully about timing. Where there is a live uncertainty in the law, advisers sometimes discuss whether a protective claim should be made before the normal deadline expires. That is a procedural point, not a statement that the claim is strong on the merits. A protective claim may preserve a position, but it does not improve weak facts.

So does Mudan “kill” all claims? No. But it does eliminate many claims that were previously advanced on the basis of extensive disrepair alone. The remaining successful cases are likely to be those with very strong evidence that the property truly could not function as a dwelling at the relevant date.

Outcome

The practical conclusion is that claims based merely on extensive repair needs are now much less likely to succeed. A buyer should not proceed on the assumption that a run-down or unmortgageable property automatically falls outside the residential SDLT rules.

After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition threshold for “unsuitable for use as a dwelling” is relatively high. Only stronger cases with serious and well-evidenced defects are likely to have a realistic prospect of success.

Practical Steps

If you are assessing a possible SDLT reclaim on this ground, take these steps:

• Check the filing and amendment deadlines immediately.
• Obtain all purchase documents, including the SDLT return, SDLT5, contract, transfer, and completion papers.
• Collect contemporaneous evidence of condition at completion, especially surveys, photographs, videos, invoices, and contractor reports.
• Focus on whether the property could actually be used as a dwelling at that date, not simply whether it needed expensive renovation.
• Review the facts against section 116 Finance Act 2003 and the current case law, especially Mudan.
• Consider carefully whether any claim would be substantive or merely protective for limitation purposes.
• Be prepared for HMRC enquiry risk, repayment risk, interest, and possible penalties if the claim is weak or contrary to settled authority.

Conclusion

You can still consider an SDLT reclaim where a property was genuinely not suitable for use as a dwelling at completion, but the bar is now high. A property that merely needs extensive repair will often still count as residential property. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, careful factual analysis and strong evidence are essential before any claim is made.

Legal References Used

• Finance Act 2003, section 116
• 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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