For finance leaders in highly acquisitive property businesses, the atmosphere around property tax reliefs has changed. Reliefs that once passed almost automatically are now attracting close inspection. HMRC is digging deeper, asking sharper questions, and in some cases, pushing disputes to the limit. The result? Higher risks of delays, unexpected costs, and the possibility of your business being used as a public example.
Why mixed-use Stamp Duty Land Tax claims are under the microscope
Mixed-use relief has long been a favourite tool to reduce acquisition costs on properties containing both residential and commercial elements. But the line between “genuinely mixed” and “mostly residential” is now being tested. HMRC isn’t content with a quick box-tick. They want proof.
This means plans, leases, photographs, and a clear explanation of how the non-residential element is integral to the property’s function. If it’s incidental, expect questions. If your evidence feels patchy, expect more than questions.
Incorporation Relief and Special Purpose Vehicles structuring risks
Moving rental properties or development sites into Special Purpose Vehicles (SPVs) can bring big advantages, not least the ability to defer Capital Gains Tax through Incorporation Relief. Be aware that this is an area of focus for HMRC, ensure you hold all documentation to support all conditions are met.
If the transaction appears motivated primarily by tax efficiency rather than a genuine commercial need, the relief may be denied. Partnerships and loosely structured joint ventures are especially vulnerable.
Redevelopment VAT pitfalls
VAT on redevelopment projects is rarely straightforward, especially when a development mixes residential and commercial units or changes use part-way through. A shift in purpose can transform a zero-rated project into a standard-rated one, with large VAT assessments following years later.
These errors don’t always arise from negligence. Often, they’re the result of assumptions made early in a project without considering how variations down the line will affect the tax position. But when HMRC comes calling, intent matters little.
Common mistakes and how to avoid them
Across SDLT, Annual Tax on Enveloped Dwellings (ATED), and VAT reliefs, familiar patterns emerge. We have seen businesses relying on old advice without checking the current legislation. They skip thorough documentation of commercial reasoning, assuming it’s obvious. Treating claims as routine when, in this environment, they’re anything but.
The case for proactive tax advice
Early specialist input isn’t a luxury, it’s an insurance policy. When reliefs are being challenged more aggressively, the cost of advice before a deal is often far less than the cost of defending that deal later. For property businesses where acquisitions, restructures, and redevelopments happen at pace, a proactive approach is the difference between smooth sailing and a storm.
This means reviewing structures and transaction plans before signing contracts, stress-testing relief positions, and preparing evidence as though you know it will be reviewed. Because it probably will be.
The immediate priority for finance leaders is to ensure recent and upcoming transactions can withstand HMRC’s growing scrutiny. This means auditing deals that rely on SDLT, ATED or VAT reliefs, and confirming that the underlying assumptions still hold. Internal processes for collecting and storing evidence should also be updated so that documentation is ready if challenged.
It’s equally important to brief both your finance team and external advisors on HMRC’s current focus areas, so potential risks are flagged early rather than discovered during a review. Finally, build in time for a pre-transaction check before acquisitions or restructures. Catching issues upfront is far easier, and less costly, than firefighting them later.
The rules themselves haven’t dramatically changed. What’s changed is the way HMRC applies them. By staying proactive and documenting thoroughly, you protect not just the value of the reliefs but the reputation and stability of your business.
Turning scrutiny into strategy: introducing My Tax Partner
The tightening stance on SDLT, ATED, and VAT reliefs shows just how quickly property tax positions can come under pressure. This is exactly where My Tax Partner makes the difference. Acting as your embedded strategic Head of Tax, we stress-test relief claims, document commercial rationale, and ensure your structures and transactions are built to withstand HMRC’s sharper scrutiny. Instead of firefighting disputes, you gain confidence that risks are identified early and managed proactively.
For property finance leaders, that means deals progress without unexpected tax hurdles, investor confidence is protected, and your team can focus on growth rather than compliance battles. With My Tax Partner, you turn tax from a potential vulnerability into a source of resilience and strategic advantage.
