In the case of Candy v Revenue and Customs Commissioners [2025], the taxpayer (Christian Candy (CC)) overturned a decision of HM Revenue & Customs (HMRC) to recover £1.92m of Stamp Duty Land Tax (SDLT).
The background facts were relatively complicated but the issue at stake was simply whether CC could recover SDLT paid by him (namely £1.92m) following substantial performance of an agreement for lease entered into by him which was ultimately not carried into effect. CC's obligations and liabilities under the agreement were extinguished when the relevant agreement was novated to his brother.
In a previous case, CC had already sought to recover the SDLT from HMRC under section 44(9) Finance Act 2003 (FA 2003). This section provides that SDLT paid following substantial performance of an agreement can be reclaimed, provided the reclaim is made by amendment to the land transaction return submitted to HMRC in respect of the relevant agreement and such amendment is made within twelve months of the filing date of the transaction. In that case, the Court of Appeal determined that recovery of the SDLT was not possible as the repayment claim had not been made within the required time limit.
At the same time as making a claim for repayment of the SDLT under section 44(9), CC also applied for repayment of the SDLT in the alternative under paragraph 34, Schedule 10, FA 2003. This paragraph applies where: (a) a person has paid an amount by way of SDLT but believes that the SDLT was not due; or (b) a person has been assessed as liable to pay an amount by way of SDLT, or there has been a determination to that effect, but the person believes that the SDLT is not due. The time limit for claims under paragraph 34 is four years from the effective date and it is subject to restrictions contained in paragraph 34A, Schedule 10, FA 2003.
HMRC argued that section 44(9) prevented a repayment of the SDLT under paragraph 34 because a repayment was only possible by way of an amendment to an SDLT return which had to be done within twelve months of the relevant filing date and that had not occurred.
Counsel for CC said that paragraph 34 was a stand-alone provision, unaffected by section 44(9) and designed to provide a 'back-stop remedy' where tax has been overpaid and repayment of the SDLT could not be claimed on any other statutory basis. CC's claim under paragraph 34 had been made within the four-year time limit and counsel said that none of the restrictions in paragraph 34A applied. On this basis, counsel argued that CC should be entitled to repayment of the £1.92m.
The tribunal judge used both the explanatory notes to the Finance (No.2) Bill 2010 which introduced paragraph 34 and the technical note which introduced for comment the draft legislation which became paragraph 34, to aid in the statutory interpretation of paragraph 34. He concluded that section 44(9) did prevent a repayment claim being made under section 44(9) other than by way of an amendment to an SDLT return, but section 44(9) did not prevent a claim for repayment of SDLT being made under paragraph 34. The judge agreed with counsel for CC that paragraph 34 was of wide application and that on the basis CC's claim for repayment under paragraph 34 was made in time and his claim satisfied the conditions of this paragraph, he was entitled to repayment of the £1.92m.
This case is only a First-tier Tribunal decision and with a lot of SDLT at stake, it remains to be seen whether HMRC will accept the ruling or appeal it. If left to stand, the ruling may open the doors to other repayment claims previously not thought possible.
If you have any queries concerning SDLT and would like advice, please contact our tax specialists.
