Key Facts
- •Appellants purchased a semi-detached property with a main house and annexe on September 6, 2021.
- •Appellants claimed Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT).
- •HMRC disallowed the MDR claim, leading to a £13,000 tax increase.
- •The annexe is a separate building approximately 20 meters from the main house, with its own kitchen, bathroom, and bedroom.
- •The annexe lacked separate utility meters, a postal address, and planning permission as a separate dwelling.
- •The annexe was previously rented out to an unconnected tenant.
Legal Principles
Multiple Dwellings Relief (MDR) applies if a chargeable transaction involves at least two dwellings.
Finance Act 2003 (FA), Schedule 6B, paragraph 2
A building is considered a dwelling if it is used or suitable for use as a single dwelling.
Finance Act 2003 (FA), Schedule 6B, paragraph 7(2)
"Suitable for use as a single dwelling" means the property must be appropriate or fit for use as a single dwelling at the time of the transaction. Adaptations or alterations are not sufficient.
Fiander and Brower v HMRC [2021] UKUT 0156
The suitability of a property as a dwelling is an objective assessment considering all facts and circumstances, including physical attributes, privacy, self-sufficiency, and security. The test is for suitability for occupants generally.
Fiander and Brower v HMRC [2021] UKUT 0156
The absence of planning permission is not determinative of whether a building is suitable for use as a dwelling; the objective factors are relevant.
Ridgeway v HMRC [2024] UKUT 00036 (TCC)
In assessing suitability for use as a dwelling, the physical configuration and facilities are very important, but a multi-factorial assessment considering all relevant circumstances is required.
Winfield v HMRC [2024] UKFTT 734 (TC)
Outcomes
Appeal allowed.
The Tribunal found the annexe met the criteria for a separate dwelling under Fiander and Ridgeway, despite the lack of planning permission, separate utilities, and some impingement on privacy. The annexe's functionality as a self-contained living space, its prior use as rented accommodation, and the overall degree of privacy and security outweighed other factors.