Judgment summary
This is an appeal by HMRC against a decision of the First-tier Tribunal (Tax Chamber) released on 10 April 2025 ([2025] UKFTT 00416 (TC)), which allowed Mr Christian Candy's appeal against HMRC's refusal of his claim for repayment of SDLT under paragraph 34, Schedule 10, Finance Act 2003 (the paragraph 34 claim) (1)-(4).
The claim concerned £1,920,000 of SDLT paid on the substantial performance of a contract for the assignment of a lease (the Contracted-out Lease), which was subsequently not carried into effect in the manner originally intended (2). HMRC had refused the claim in a closure notice dated 13 August 2015 on the basis that repayment could only be claimed by amendment of a land transaction return under section 44(9) FA 2003, and Mr Candy was out of time to do so (4).
The Upper Tribunal (Mr Justice Cawson and Judge Ashley Greenbank) dismissed HMRC's appeal, upholding the FTT's decision that the wording of section 44(9) does not preclude a claim for overpayment relief under paragraph 34 (84)-(85).
Background
Mr Candy (CC) entered into two contracts on 9 August 2012 with the Commissioners of the Royal Hospital Chelsea and Intermediate Landlords in respect of Gordon House, London: an Initial Lease (25-year term, premium £20 million) and an agreement for assignment of a Contracted-out Lease (201-year term, purchase price £48 million payable in four instalments) (11)-(13).
CC's building contractors commenced work on 10 August 2012, effecting 'substantial performance' of the agreement for the Contracted-out Lease for the purposes of section 44(4) (17). SDLT was paid accordingly, with chargeable consideration of £48 million in respect of the substantial performance of the Contracted-out Lease agreement (22).
On 1 April 2014, CC gifted his interests in Gordon House, including the benefit of the Contracted-out Lease agreement, to his brother Nicholas Candy (NC) by way of a Deed of Novation, in consideration of natural love and affection (18). Under the Deed of Novation, CC was released from all remaining obligations under the original agreement, which the parties acknowledged were extinguished, with NC assuming the remaining obligations (18).
On 10 April 2014, CC applied to HMRC for repayment of the £1,920,000 SDLT under section 44(9) by amending his return, and in the alternative under paragraph 34 (the paragraph 34 claim) (24). HMRC rejected the section 44(9) claim by letter dated 16 May 2014, and this refusal was ultimately upheld by the Court of Appeal in Candy 1 CA, following earlier decisions of the FTT and UT (3), (25)-(26), (31).
HMRC gave notice of an enquiry into the paragraph 34 claim on 2 July 2014 and rejected that claim by a decision dated 13 August 2015, which is the subject matter of this appeal (27), (4).
Core dispute
The sole issue before the Upper Tribunal was whether section 44(9) FA 2003 applies to preclude any claim for overpayment relief under paragraph 34, Schedule 10 FA 2003, in circumstances where tax would have been repayable under section 44(9) because a substantially performed contract was not carried into effect, but the taxpayer was out of time to amend the relevant land transaction return (17), (25).
HMRC's position, advanced by Mr Afzal KC, was that the wording of section 44(9) is clear and unambiguous: any repayment 'must' be claimed by amendment of a land transaction return, and this mandatory language precludes reliance on paragraph 34 as an alternative route (18), (54).
Mr Candy's position, advanced by Mr Thomas KC, was that paragraph 34 is a distinct, stand-alone statutory remedy operating as a 'back-stop' where relief cannot be claimed on any other statutory basis, subject only to the restrictions in paragraph 34A and the time limit in paragraph 34B, neither of which applied in this case (19).
Court findings
The Upper Tribunal considered the principles of statutory construction set out by Lord Hodge in R(on the application of O (a child)) v Secretary of State for the Home Department [2023] AC 255, emphasising that the words Parliament used, read in context, are the primary source of meaning, with external aids playing a secondary role (27)-(29).
The Tribunal reviewed the purpose of section 44 as explained by Simler LJ in Candy 1 CA: section 44(4) addresses 'resting on contract' avoidance, while section 44(9) provides a safeguard allowing repayment where a substantially performed contract is not completed, subject to the strict time limit in paragraph 6(3), Schedule 10 for amending returns (31)-(34).
The Tribunal found that paragraph 34, within Part 6 of Schedule 10, provides a separate statutory remedy of last resort for overpaid SDLT, with its own time limit (four years, under paragraph 34B) and its own restrictions (Cases A to G in paragraph 34A), operating independently of other reliefs in the SDLT code (36)-(40), (52).
Extra-statutory materials, including Explanatory Notes to the Finance (No.3) Bill 2003 and the Finance (No.2) Bill 2010, and HMRC's Technical Note 'Relief for mistakes in Stamp Duty Land Tax Returns', were found to support this conclusion, though playing only a secondary role in interpretation (41)-(53).
The Tribunal considered the treatment of paragraph 34 claims in BTRCore Fund JPUT v HMRC [2026] UKUT 27 (TCC) and L-L-O Contracting Limited v HMRC [2025] UKUT 127 (TCC), both concerning failed or incorrect claims for multiple dwellings relief (MDR) under section 58D(2) FA 2003, which contains similarly mandatory wording to section 44(9). In both cases the tribunals treated overpayment relief as available notwithstanding the mandatory requirement that MDR claims be made in a return (56)-(65).
The Tribunal rejected each of HMRC's six reasons in support of its ground of appeal, save that it agreed the FTT's reliance on Case C in paragraph 34A was a non-sequitur, though this did not affect the outcome (71)-(79).
The Tribunal identified two features distinguishing a section 44(9) claim from claims to other reliefs: first, section 44(4) is an anti-avoidance provision addressing 'resting on contract', a rationale not applicable to other reliefs; and second, the right under section 44(9) arises only on a subsequent event (rescission, annulment or failure to carry the contract into effect), unlike reliefs determined at the effective date of the transaction (80). The Tribunal found that these features meant the exclusions in Cases A and C of paragraph 34A were unlikely to apply naturally to such claims, but concluded this did not justify reading section 44(9) as precluding a paragraph 34 claim altogether (81)-(83).
The Tribunal did not decide whether Mr Candy's claim in fact satisfied the requirements of paragraph 34 itself, as HMRC did not pursue on appeal the argument that there was no 'overpayment' of tax absent an in-time claim under section 44(9) (25), (66), (83).
Outcome
The Upper Tribunal dismissed HMRC's appeal, holding that the wording of section 44(9) FA 2003 does not preclude a claim for overpayment relief under paragraph 34, Schedule 10 FA 2003 (84)-(85).
Major issues / areas of contention
- Whether section 44(9) FA 2003, which requires that a repayment following non-completion of a substantially performed contract 'must' be claimed by amendment of the land transaction return, precludes an alternative claim for overpayment relief under paragraph 34, Schedule 10 FA 2003 (25).
- Whether paragraph 34, Schedule 10 FA 2003 operates as a 'backstop' or remedy of last resort, separate from other statutory reliefs in the SDLT code, including the right to repayment under section 44(9) (19), (38)-(40).
- The relevance of the Court of Appeal's decision in Candy 1 CA, concerning the strict time limit for amending returns under paragraph 6(3), Schedule 10, to the availability of a paragraph 34 claim (31)-(34), (72).
- The relevance of analogous case law (BTR UT and L-L-O UT) concerning overpayment relief claims arising from failed or incorrect claims to multiple dwellings relief under section 58D(2) FA 2003 (56)-(67).
- Whether the restrictions in paragraph 34A (Cases A to G), in particular Case A and Case C, apply to, or adequately regulate, a paragraph 34 claim based on an inability to make a claim under section 44(9) (76)-(82).
- The correct interpretation of paragraph 34(6), Schedule 10 FA 2003 and whether it incorporates the requirements of other provisions such as section 44(9) as bars to a paragraph 34 claim (78)-(79).