Martin Lynch & Anor v The Commissioners for HMRC
[2024] UKFTT 350 (TC)
Mike Lazaridis v The Commissioners for HMRC
17 October 2024
[2024] UKFTT 925 (TC)
First-tier Tribunal
Someone bought a big house with a large field. The government said the field was part of the house and extra tax was due. The court looked at many things: how close the field was, what the field was used for (cutting grass), and what the agreement said. The court decided the field was part of the house because it was close, was mentioned as part of the garden, and the fact the grass was cut kept it nice and maintained. The extra tax was upheld.
Key Facts
- •Mr. Lazaridis purchased a 106-acre property, Woodlands, including a 40-acre field used for growing and cutting grass under a mowing license.
- •HMRC assessed additional SDLT (£1,214,250) claiming the property was entirely residential.
- •The dispute centered on whether the 40-acre field was part of the dwelling's grounds under FA 2003, s 116(1)(b).
- •A mowing license existed between the previous owner and AT Bone and Sons Ltd, granting access to cut grass for commercial purposes.
- •The field was close to, and partly visible from, the main dwelling.
- •The sales brochure described the property as a parkland estate and included the fields under 'Gardens & Grounds'.
Legal Principles
Definition of 'residential property' under FA 2003, s 116(1)(b) includes land forming part of the garden or grounds of a dwelling.
Finance Act 2003, Section 116(1)(b)
Determining whether land forms part of a dwelling's grounds involves a multifactorial assessment considering proximity, size, layout, use, legal constraints, and connection to the dwelling.
Hyman and others v HMRC [2021] UKUT 68 (TCC), How Development 1 Ltd v HMRC [2023] UKUT 84 (TCC), 39 Fitzjohns Avenue Ltd v HMRC [2024] UKFTT 28 (TC)
Commercial use of land is a relevant factor but not conclusive in determining whether it forms part of the grounds. The 'ultimate' use of the land is more important than 'intermediate' uses.
Myles-Till v HMRC [2020] UKFTT 127 (TC), Harjono and another v HMRC [2024] UKFTT 228 (TCC), Lynch and another v HMRC [2024] UKFTT 350 (TC)
HMRC's SDLT Manual provides a fair and balanced starting point for assessing the relationship between land and a dwelling, considering historic and future use, layout, and legal factors.
HMRC SDLT Manual (SDLTM00450, SDLTM00460, SDLTM00465)
Outcomes
Appeal dismissed.
The Tribunal concluded that the factors supporting the field's inclusion as part of the grounds outweighed those against. The field's proximity to the house, its inclusion in the sales brochure under 'Gardens & Grounds', the relatively small licence fee, and the overall benefit of maintained land outweighed the commercial aspect of the mowing license.