Recovery of an invalid refund

The taxpayer wrote to HMRC claiming multiple dwellings relief (MDR) in respect of a property for which it had submitted a stamp duty land tax return but omitted the claim. HMRC said the relief should have been claimed in the return and that the taxpayer had missed the relevant deadline. HMRC therefore told it was liable to give effect to the claim. However as a consequence of HMRC’s practice of paying relief claims before processing it sent the taxpayer a refund. It then issued a closure notice and assessment to recover the repayment.

The taxpayer appealed.

On the taxpayer’s assertion that the closure notice was countermanded by the repayment the First-tier Tribunal disagreed. The judge agreed that the way the legislation operated was ‘potentially confusing for an ordinary taxpayer’ HMRC had been giving effect to the claim on a provisional basis – as the law...