Key Facts
- •Mr. Brzezicki purchased a property with over 6 acres of land, including a six-bedroom house, a garden, a two-acre island separated by a man-made carrier stream, and a fisherman's cabin.
- •The carrier stream was designed to breed brown trout, with features like a sluice, waterfall, and spawning grounds.
- •Mr. Brzezicki intended to use the property for fly-fishing, accommodation, and trout farming.
- •HMRC initially assessed the property as entirely residential, leading to an appeal.
- •The dispute centered on whether the land beyond the carrier stream was residential or non-residential.
Legal Principles
Stamp Duty Land Tax (SDLT) is charged on land transactions, including any acquisition of a chargeable interest.
Finance Act 2003, sections 42, 43, 48
Residential property includes buildings suitable for use as dwellings and their gardens or grounds; non-residential property is anything else.
Finance Act 2003, section 116(1)
A multi-factorial test determines whether property is residential or non-residential.
Case law (implied)
The burden of proof lies on the appellant to show HMRC's assessment is incorrect.
Case law (implied)
The relevant factors to consider in determining whether land forms part of the 'garden or grounds' are multifactorial; factors include historical use, proximity to dwelling, layout and size of land and any legal constraints.
Case law (Hyman, Goodfellow, Fitzjohns Avenue, Thomas Kozlowski, Harjono, Ladson Preston, Candy, HMRC v Mr and Mrs Suterwalla, Faiers)
The determination of residential or non-residential status must be made at the time of completion, not retrospectively.
Thomas Kozlowski and Harjono
Land covered by water is still land for SDLT purposes.
Finance Act 2003, section 121
Outcomes
Appeal allowed.
The Tribunal found that the land west of the carrier stream (the island) was not contiguous with the main dwelling and grounds. The carrier stream itself was considered a 'factory' for trout breeding, making it non-residential.
Dissenting opinion.
The dissenting member argued that the land west of the carrier stream was contiguous enough to the main dwelling and that the overall impression and marketing materials indicated residential use, despite the potential for commercial trout breeding.