Jonathan Ralph v The Commissioners for HMRC
[2023] UKFTT 901 (TC)
Newsand Limited v The Commissioners for HMRC
13 March 2024
[2024] UKFTT 221 (TC)
First-tier Tribunal
A company was taxed more than they thought they should be on a property purchase. They argued they should get a tax break ('MDR') because they were converting the building into apartments. The tax office tried to stop the case early, but the judge said it needed a full hearing to decide if the company should get the tax break or not.
Key Facts
- •Newsand Limited appealed an HMRC closure notice denying Multiple Dwellings Relief (MDR) resulting in £251,731 additional Stamp Duty Land Tax (SDLT).
- •The appeal hinged on whether the property was 'in the process of being...adapted' for use as a dwelling at completion, per Schedule 6B, Finance Act 2003.
- •HMRC applied to strike out the appeal for lacking reasonable prospect of success under FTR 8(3)(c).
- •The property was a commercial building at completion, but adaptation works (stripping internal walls) commenced the same day.
- •The appellant argued the case differed from Ladson Preston Ltd v HMRC [2022] UKUT 00301 because it involved adaptation, not construction, of an existing building.
Legal Principles
A Tribunal can strike out proceedings if there's no reasonable prospect of success (FTR 8(3)(c)). The test is whether the claim is 'realistic' rather than 'fanciful'.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009; The First De Sales Ltd Partnership and others v HMRC [2018] UKUT 396; Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch); AC Ward & Sons v Caitlin Five Limited [2009] EWCA Civ 1098
For MDR under Schedule 6B FA 2003, there must be a 'physical manifestation' of the dwelling in the process of construction or adaptation at the time of completion. Works starting after completion are irrelevant.
Ladson Preston Limited and AKA Developments Greenview Limited v HMRC [2022] UKUT 00301
Outcomes
HMRC's application to strike out the appeal was refused.
The Tribunal found arguable differences between 'construction' and 'adaptation' in the context of MDR, and that the facts weren't fully established to justify striking out the case without a full hearing. The Tribunal acknowledged the possibility of the appellant succeeding if they could prove their facts. It emphasized the importance of fairness and avoiding unnecessary delay.