Yisroel Dreyfus v The Commissioners for HMRC
[2024] UKFTT 244 (TC)
Jonathan Ralph v The Commissioners for HMRC
20 October 2023
[2023] UKFTT 901 (TC)
First-tier Tribunal
A wealthy businessman bought a house and a separate garage with rooms above. He wanted a tax break because he thought the garage was a second house. The tax office said no because the garage didn't have a kitchen or plumbing at the time he bought it, even though he planned to add them later. The judge agreed with the tax office.
Key Facts
- •Appellant purchased a house and a separate annexe (garage with rooms above) for £3,300,000.
- •Appellant claimed Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT).
- •HMRC denied MDR, leading to an additional SDLT of £101,250.
- •The key dispute was whether the annexe was a 'dwelling' at the time of completion (4 December 2020).
- •The annexe lacked a fitted kitchen with a sink and high-voltage power connections for a cooker at completion, although it had a microwave, kettle, toaster, and fridge.
- •Appellant intended to and subsequently did carry out alterations to install a full kitchen after completion.
Legal Principles
A building is a 'dwelling' if it is 'used or suitable for use as a single dwelling', or 'in the process of being...adapted for such use'.
Paragraph 7(2), Schedule 6B, Finance Act 2003
The 'suitable for use' test is objective, assessed from the perspective of a reasonable observer at the effective date (completion).
Fiander and Brower v HMRC [2021] UKUT 0156 (TCC)
'In the process of being adapted' requires physical works to have commenced by the effective date.
Ladson Preston and Anor v HMRC [2022] UKUT 310 (TCC)
Outcomes
Appeal dismissed.
The annexe was not 'suitable for use as a single dwelling' at completion due to the lack of essential kitchen facilities and infrastructure. The adaptation process had not commenced by the completion date.