Benjamin Packman & Anor v The Commissioners for HMRC
[2024] UKFTT 954 (TC)
Thomas Yeomans v The Commissioners for HMRC
24 October 2024
[2024] UKFTT 955 (TC)
First-tier Tribunal
A couple bought a house with a separate annexe. They wanted a tax break (MDR) because it was like two houses. The tax office said no because the houses shared some utilities (heating, electricity). The judge said yes, it's still two houses even if they share some things, because each part could be lived in separately.
Key Facts
- •Mr. and Mrs. Yeomans purchased a property with a main house and annexe for £895,000 on March 31, 2022.
- •They initially paid SDLT without claiming Multiple Dwellings Relief (MDR).
- •They later claimed £10,000 MDR, which was rejected by HMRC.
- •The property consists of a main house and an annexe, with separate entrances but shared utilities (boiler, fuse box).
- •The property was marketed as a single dwelling with a self-contained annexe.
- •The main house and annexe are listed separately for council tax.
Legal Principles
To qualify for MDR, the property must consist of at least two dwellings, each 'used or suitable for use as a single dwelling'.
Finance Act 2003, Schedule 6B, paragraph 7(2)(a)
The suitability of a property as a single dwelling is determined objectively based on its physical attributes at the time of completion, not potential adaptations or the buyer's intentions.
Fiander and Brower v HMRC [2021] UKUT 0156 (TCC)
Whether an unconnected buyer would purchase the properties separately is not the determining factor for MDR eligibility.
This Tribunal's decision in the case, rejecting the argument from Mobey v Revenue and Customs [2021] UKFTT 122 (TC)
A dwelling should be able to control all or most of its utility services.
HMRC guidance at SDLTM00430
Outcomes
The appeal was allowed.
The Tribunal found that despite the shared utilities (boiler and fuse box located in the annexe), the main house and annexe were suitable for use as separate dwellings, considering factors such as separate entrances, council tax listings, and the ability to let them separately.