Oisin Fanning v The Commissioners for HMRC
[2023] EWCA Civ 263
Investment and Securities Trust Limited v The Commissioners for HMRC
18 March 2024
[2024] UKFTT 230 (TC)
First-tier Tribunal
A company bought an option to buy a house, but the main reason wasn't just to develop and sell it – it was also to give money to the owner, who was also a company director. Because it wasn’t just about developing the property, the company had to pay extra tax. They also couldn't avoid tax because the director already lived there, and the company didn't control if she stayed.
Key Facts
- •Investment and Securities Trust Limited (IST) appealed an SDLT assessment of £372,000 and three ATED closure notices.
- •The dispute arose from an option agreement for a property owned by Ms. Voice, a director and shareholder of IST.
- •IST argued for relief under SDLT and ATED legislation due to the property being acquired for a property development trade.
- •HMRC contended that the option wasn't acquired exclusively for the trade and that Ms. Voice was permitted to occupy the property.
- •The option agreement involved a substantial option price paid to Ms. Voice, which was part of the purchase price.
- •IST did not acquire the freehold interest until later, after obtaining planning permission.
Legal Principles
Higher rate of SDLT applies to high-value residential transactions acquired by companies unless exclusively for specified purposes (e.g., property development trade).
Schedule 4A, FA 2003
ATED relief for property developers requires exclusive use of the interest for development and resale, excluding permitted occupation by non-qualifying individuals.
s138 FA 2013
'Exclusively' means solely; the only purpose. It's not a main purpose test.
Consultus Care and Nursing Limited v HMRC [2020] UKFTT 179
The 'permitted' occupation test under SDLT and ATED requires the purchaser to have control over occupancy; mere knowledge or non-prevention is insufficient.
Tophams Ltd v Sefton (Earl) [1967] 1 A.C. 50; Berton and Others v Alliance Economic Investment Company [1922] 1 K.B. 742
Outcomes
Appeal dismissed.
IST did not acquire the option exclusively for property development; other purposes, including providing funds to Ms. Voice, were present. Ms. Voice's occupation was not 'permitted' by IST as they lacked control over her occupancy as freeholder.