--- title: "Couple Wins £1.7M Stamp Duty Refund Battle Against HMRC" url: https://taxdisputes.co.uk/2025/12/couple-wins-1-7m-stamp-duty-refund-battle-against-hmrc/ date: 2025-12-12 modified: 2026-06-02 author: "Hamza Chaudhry" description: "In a landmark FTT victory, a couple overturned HMRC's £1.7m SDLT demand on their luxury London flat by proving 'mixed use' status through a small basement cupboard, echoing successful refund strategies in Candy and other high-value cases." categories: - "SDLT" - "Stamp Duty" - "Tax Issue" - "Tribunal Proceedings" tags: - "First Tier Tax Tribunal" - "HMRC" - "HMRC Investigations" - "HMRC SDLT dispute" - "HMRC Tax Assessment" - "HMRC Tax Disputes" - "residential stamp duty rates" - "Stamp Duty Refund" image: https://taxdisputes.co.uk/wp-content/uploads/2025/12/Couple-Wins-1.7M-Stamp-Duty-Refund-Battle-Against-HMRC-1024x559.png word_count: 859 --- # Couple Wins £1.7M Stamp Duty Refund Battle Against HMRC In the high-stakes world of luxury property transactions, [stamp duty land tax (SDLT)](https://www.gov.uk/stamp-duty-land-tax/residential-property-rates) can add millions to acquisition costs, but savvy taxpayers armed with [precise legal advice](https://taxdisputes.co.uk/contact-us/) continue to secure substantial refunds against [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). The latest triumph comes from Raj and Varsha Sehgal, who in 2022 purchased a stunning £18.25 million apartment in London's prestigious [Grosvenor Square](https://en.wikipedia.org/wiki/Grosvenor_Square), only to face a hefty residential SDLT bill. By leveraging a modest basement storage unit as the key to a 'mixed use' classification, they convinced the [First-tier Tribunal Tax (FTT)](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax) to slash their liability by £1,749,250. This demonstrates once again how technical compliance with [Finance Act 2003, Schedule 6A](https://www.legislation.gov.uk/ukpga/2003/14/schedule/6A) can unlock multimillion-pound savings even in the face of HMRC resistance. This case builds on a series of taxpayer victories, including [Christian Candy's £4.3 million refund on a £68 million mansion](https://taxdisputes.co.uk/2025/04/christian-candy-wins-stamp-duty-refund-battle-against-hmrc-over-68-million-mansion/) through garden recharacterisation, a £47,000 win via non-residential evidence, and a £20,000 recovery after rigorous scrutiny of ancillary spaces, underscoring the critical need for meticulous documentation from day one. ## £18.25m Grosvenor Square Flat In a landmark [First-tier Tribunal Tax (FTT)](https://www.judiciary.uk/courts-and-tribunals/tribunals/first-tier-tribunal/first-tier-tribunal-tax-chamber/) decision, Raj and Varsha Sehgal successfully challenged HMRC's £1.7 million [stamp duty land tax (SDLT)](https://www.gov.uk/stamp-duty-land-tax/residential-property-rates) assessment on their 2022 purchase of a luxury £18.25 million apartment in Grosvenor Square, London. The couple argued the property qualified as 'mixed use' due to a separate basement storage unit measuring less than 2x4 metres, preventing classification as entirely residential under Finance Act 2003, Schedule 6A, which triggers higher SDLT rates only for wholly residential premises. The tribunal acknowledged a "strained interpretation" but ruled that the legislation's explicit wording compelled the lower mixed-use rates, because the storage unit on a different floor created non-residential elements, despite its minor value relative to the flat. ## HMRC Tax Disputes Legal Advice & Defence [Our lawyers](https://lexlaw.co.uk/contact-us/) have a [track record](https://taxdisputes.co.uk/success/) of successfully challenging HMRC decisions and will assist you to get an optimal result. We analyse the merits at the very outset in an [initial video conference](https://lexlaw.co.uk/legal-case-assessment/) together with leading (ex-HMRC and Big 4) [tax litigation Counsel](https://lexlaw.co.uk/andrew-young/). We provide [urgent advice and representation](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) to clients from our unique expert team of established [Tax specialist Solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) and [Barristers](https://lexlaw.co.uk/andrew-young/) with a proven track record of delivering results. Call us on 02071830529, or [fill our online form](https://lexlaw.co.uk/legal-case-assessment/). ## Taxpayers' Mixed-Use Claim v HMRC Rejection HMRC initially classified the entire acquisition as residential, applying top SDLT bands to the flat plus storage unit. The Sehgals amended their return, claiming mixed-use treatment for a substantial refund, but HMRC refused, insisting the cupboard served domestic purposes ancillary to the dwelling. The appeal hinged on whether the "whole of the premises" met residential criteria, with the separate-floor location proving pivotal. ## Evidence: Storage Unit Dimensions, Location and Statutory Test Critical evidence included floor plans showing the <2x4m cupboard in the basement, distinct from the apartment, supporting non-residential use. Finance Act 2003, Sch 6A para 7 defines dwellings strictly; any non-residential land precludes higher rates. The FTT rejected HMRC's dominance argument, prioritising literal statutory compliance over policy intent. ## First Tier (Tax) Tribunal Ruling: £1.7M Refund Ordered The tribunal ruled for the Sehgals, directing HMRC to reclassify as mixed-use and refund £1,749,250 precisely. It noted the "surprising result" but upheld the law's clarity: residential rates demand 100% residential land. HMRC must now adjust, highlighting tribunal deference to technical arguments in high-value disputes. ## Key Takeaways for SDLT Buyers and Planners - Secure detailed plans and usage affidavits for ancillary spaces like storage from acquisition to support mixed-use claims. - Separate locations (e.g., basement units) strengthen cases against HMRC's ancillary-use defence. - Decision aligns with precedents like Candy, where minor features yielded multimillion refunds; act swiftly on amendments within statutory windows. ## Broader Implications Amid SDLT Reform Pressures Experts predict budget scrutiny on such loopholes yet current law binds HMRC and tribunals. Buyers of London luxury flats should evaluate mixed-use potential proactively, especially post-2022 purchase spikes. ## LEXLAW: Specialist SDLT Dispute Resolution [Our ex-HMRC Barristers](https://lexlaw.co.uk/andrew-young/) and [dual-qualified Solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) in [Middle Temple](https://www.middletemple.org.uk/) excel in [SDLT appeals](https://www.gov.uk/guidance/sdlt-appeal-against-a-penalty), mirroring successes in Candy-style refunds and tribunal victories. We provide privileged strategy to maximise refunds confidentially. ## Expert London Tax Dispute Lawyers Navigating [tax disputes](https://taxdisputes.co.uk/) with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) can be a complex and stressful process. [Our specialist team](https://lexlaw.co.uk/our-people/christopher-snell/) of tax dispute lawyers, including experienced solicitors and barristers, provides expert legal advice and robust representation to individuals and businesses facing [challenges from HMRC](https://taxdisputes.co.uk/hmrc-tax-appeals/). Whether you are dealing with stamp duty issues, income tax assessments, or other tax investigations, we offer tailored solutions to protect your interests. Our services include: - Comprehensive assessment of your tax situation and potential liabilities. - Expert advice on HMRC tax appeals and the relevant legal procedures. - Strategic negotiation with HMRC to achieve the most favourable outcome. - Experienced representation at the First Tier Tax Tribunal and higher courts. If you are involved in a tax dispute with HMRC, including matters related to stamp duty, it is crucial to [seek timely and expert legal advice](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/). Contact our team today for a [confidential consultation](https://lexlaw.co.uk/legal-case-assessment/) to discuss your case and understand how our expertise in tax law can assist you in achieving a successful resolution. Our simple enquiry form goes immediately to our tax litigators in Middle Temple, London. You can call us on 02071830529 from 9am-6pm.