Kwasi Adomako Bonsu & Anor v The Commissioners for HMRC
[2024] UKFTT 158 (TC)
Espalier Ventures Property (Lansdowne Road) Ltd v The Commissioners for HMRC
23 August 2023
[2023] UKFTT 725 (TC)
First-tier Tribunal
A company bought a flat, some garages, and rights to a shared garden. The tax man said it was all one big house and charged more tax. The court agreed because the garages and garden went with the flat, even though they had separate paperwork. The company had to pay the higher tax.
Key Facts
- •Espalier Ventures Property (Lansdowne Road) Ltd (Appellant) acquired three property interests: lock-up garages, a basement and ground floor flat, and a share of the freehold.
- •The garages were physically detached from the flat but had been in common ownership.
- •The flat had rights to use shared communal gardens.
- •HMRC determined the property was wholly residential, leading to a higher SDLT rate.
- •Appellant argued for a lower rate based on mixed use.
- •The Appellant intended to develop the property into a single dwelling, including demolition of the garages.
Legal Principles
SDLT is charged on 'land transactions', including the acquisition of a chargeable interest and any appurtenant interests.
Finance Act 2003 (FA03), sections 42, 43, 48
The SDLT rate depends on whether the interest is residential. Residential property is defined in FA03, section 116.
FA03, section 55(1B), 116
Higher SDLT rates apply to transactions exceeding £40,000 involving major interests in a single dwelling purchased by a company (Schedule 4ZA, paragraph 4). A dwelling includes land occupied or enjoyed with it.
FA03, Schedule 4ZA, paragraph 4, 18
The 'main subject matter' of the transaction determines which SDLT table applies.
FA03, section 43
Whether an interest is appurtenant depends on whether it is 'validly annexed to' and inseparable from the main interest.
Halsbury's Laws of England, Volume 87
Rights to use communal gardens can constitute an easement appurtenant to a property.
Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] UKSC 57, Ellenborough Park [1956] Ch 131
Outcomes
Appeal dismissed.
The garages and the communal garden rights were deemed appurtenant to the flat, constituting a single dwelling for SDLT purposes. The higher rate under Table A (as modified by Schedule 4ZA) applies.