Generally speaking, you expect Council Tax to be assessed on a single dwelling - but what if you...
The short answer is ‘No’. SDLT is essentially a self-assessed tax, so it is up to the taxpayer (and his advisers) to complete the SDLT1 Land Transaction Return accurately, claiming any appropriate reliefs.
HMRC then always have a nine-month window in which to challenge the return and may do so purely on random selection for compliance purposes. If this process results in HMRC taking a different view and assessing the SDLT due as greater than the amount you have paid, then you will have to pay the difference, plus interest at the going rate (currently 3%) and possibly a penalty, the level of which will depend upon whether HMRC considers that you have been careless or, worse still, deliberately misleading.
Just like Self-Assessed Income Tax for individuals, HMRC work on a ‘process now, check later’ system; in other words you are charged tax on the basis of the income supplied by you. There is no facility on the SDLT return for explaining why a specific code or relief has been claimed.
So, unless you are very sure of your ground, it is always safer to pay up-front and claim back the SDLT later. Some cases are clearcut. For example, if you are buying three separate houses in a single or linked transaction, then it will be virtually certain that (optional) Multiple Dwellings Relief will apply. If however you are buying a house with a ‘granny annexe’ or similar, then it’s not so easy to be sure (as recent Tribunal decisions have shown - with HMRC winning the vast majority of all recent MDDR cases!)
Another type of claim concerns residential properties which are ‘not suitable for habitation’ on completion (which means that the non-residential scale applies). The HMRC test is considerably more stringent than what you or I might consider uninhabitable. This is a matter of fact (not a relief).
In these less clear-cut cases, if you pay first and then seek a re-assessment, we will write to HMRC with a full explanation of why a re-assessment is appropriate, with all available supporting evidence. It’s true that, even after making a refund, HMRC still have a further nine months in which to raise a challenge, but you will have a much better chance of successfully meeting this (and avoiding a penalty) if you have presented a well-reasoned argument (which you do not have the opportunity to do in the SDLT Return).
