Thomas Yeomans v The Commissioners for HMRC
[2024] UKFTT 955 (TC)
Benjamin Packman & Anor v The Commissioners for HMRC
24 October 2024
[2024] UKFTT 954 (TC)
First-tier Tribunal
A couple bought a house with a separate annexe and wanted a tax break (MDR) because of the two dwellings. The tax man said no, but the judge said yes! The judge looked at whether the annexe was a complete, livable space—it had a kitchen and bathroom—and was sufficiently private, even though it shared utilities and didn't have its own address or planning permission. The fact it was rented out before they bought the property helped prove its use as an independent space.
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.