James George Gibson v The Commissioners for HMRC
[2023] UKFTT 648 (TC)
Gary Withers v The Commissioners for HMRC
31 May 2024
[2022] UKFTT 433 (TC)
First-tier Tribunal
Someone bought a big house with lots of land. Part of the land was rented out for sheep grazing, and another part was used for a nature project. The tax office said the whole thing was a residential property, so they owed more tax. The court decided that the rented and nature parts of the land weren't part of the house's garden, so it was a mixed-use property, meaning less tax was owed.
Key Facts
- •Appeal against a closure notice increasing Stamp Duty Land Tax (SDLT) from £114,500 to £212,500.
- •Dispute over whether the property, Lake Farm (house, annexe, and 39 acres of land), was wholly residential for SDLT purposes.
- •20 acres of land were subject to a grazing agreement with a local farmer for £800/year.
- •Approximately 8.5 acres were part of a Woodland Trust scheme.
- •Appellant argued the land was mixed-use; HMRC argued it was wholly residential.
Legal Principles
Definition of "residential property" under Section 116(1) Finance Act 2003.
Finance Act 2003, Section 116
Definition of "garden or grounds" – wide meaning, land attached to or surrounding a house, available for owner's use, not used for a separate commercial purpose.
Hyman and Goodfellow v HMRC [2022] EWCA Civ 185
Factors to consider when determining if land is part of "garden or grounds": use of land, layout of land and outbuildings, extent of land.
HMRC's SDLT manual and case law (Hyman, Goodfellow, Pensfold)
Common ownership is a necessary but not sufficient condition for adjacent land to be part of the grounds of a dwelling.
Myles-Till v HMRC [2020] UKFTT 0217
The use or function of adjoining land must support the use of the building as a dwelling for the land to be considered 'grounds'.
Myles-Till v HMRC [2020] UKFTT 0217
Outcomes
Appeal allowed.
The grazing land and Woodland Trust land were used for separate, self-standing commercial and environmental purposes, respectively, and did not functionally support the use of the dwelling as a dwelling. Therefore, they were not considered part of the "garden or grounds" and the property was not wholly residential.