Alexander and Rebecca Clark v The Commissioners For HMRC
[2024] UKFTT 923 (TC)
Shine Business Limited v The Commissioners for HMRC
7 October 2024
[2024] UKFTT 894 (TC)
First-tier Tribunal
A company tried to get a tax break because they thought their property had two homes (a main house and a smaller annex). The tax office said it was just one. The judge agreed with the tax office because the smaller annex wasn't private enough. Even though it had its own kitchen, the doors to the main house made it feel like one big home, not two separate ones.
Key Facts
- •Shine Business Limited purchased a property for £1,900,000 on 28 January 2022.
- •The property comprised a main house and an annex.
- •Shine claimed Multiple Dwellings Relief (MDR) for SDLT, arguing the property consisted of two dwellings.
- •HMRC denied the claim, stating the property was a single dwelling.
- •The dispute centered on whether the annex met the criteria for a separate dwelling under the Finance Act 2003.
- •The annex had independent access, bathroom facilities, and a newly installed kitchenette, but lacked complete privacy from the main house due to connecting doors.
Legal Principles
Multiple Dwellings Relief (MDR) is applicable if a transaction's main subject matter consists of an interest in at least two dwellings (Finance Act 2003, s 58D, Schedule 6B, para 2(2)).
Finance Act 2003
A building or part of a building counts as a dwelling if it is used or suitable for use as a single dwelling, or is in the process of being constructed or adapted for such use (Finance Act 2003, Schedule 6B, para 7(2)).
Finance Act 2003
"Suitable for use as a single dwelling" implies appropriateness and fitness for use as a single dwelling at the effective date of the transaction; mere capacity for adaptation is insufficient (Fiander and Brower v HMRC [2021] UKUT 156).
Fiander and Brower v HMRC [2021] UKUT 156
The assessment of suitability is fact-sensitive and considers the property's physical attributes, access, and whether it provides sufficient privacy and security for basic living needs (Fiander and Brower v HMRC [2021] UKUT 156).
Fiander and Brower v HMRC [2021] UKUT 156
Subsequent work or past history is generally irrelevant when determining the property's nature at the effective date of the transaction (Ladson Preston and AKA Developments Greenview Ltd v HMRC [2022] UKUT 301 (TCC)).
Ladson Preston and AKA Developments Greenview Ltd v HMRC [2022] UKUT 301 (TCC)
Outcomes
Appeal dismissed.
The Tribunal concluded that despite having independent utilities and a newly installed kitchenette, the annex lacked sufficient facilities to meet an occupier's basic living needs due to the lack of privacy and security afforded by the connecting doors and the sole external access through the bathroom.