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HMRC Wins First Tier Tribunal Case on Contested Residential SDLT Charge

James George Gibson appealed against a closure notice from HMRC regarding a property named Doe Bank Manor. The notice issued last year demanded an additional £83,000 for Stamp Duty Land Tax (SDLT).

Some key details about the property and the case:

1. Property Details:

• Purchased for £1,595,000 on 10 January 2019.

• Gibson and his family occupied it from 27 November 2018.

• Features include a six-bedroom house, a double garage with an office, a two-bedroom self-contained barn, two stables, and a two-acre paddock.

• Previously, the property had farm buildings, a farmyard, and a market garden. Now, these areas are in disuse.

• Adjoining proprietors, CHR Ventures Ltd and Paul and Rosemary Hobday, had an informal grazing agreement for the paddock.

2. SDLT Dispute:

• Gibson's initial SDLT return labelled the property as ‘mixed-use’ with a tax due of £69,500.

• However, HMRC decided the property was entirely residential, which meant higher SDLT rates, totalling £153,000.

• Gibson didn’t claim multiple dwellings relief (MDR) initially. But on 20 December 2020, he argued its eligibility since the house and barn had separate amenities and addresses.

3. Evidence & Claims:

• Gibson provided evidence of the property's use for grazing and its historical agricultural significance.

• He referred to a pre-purchase visit and brochure photographs showing grazing sheep.

• An agreement with adjoining proprietors stated that the paddock was used for grazing for at least four years before Gibson's purchase.

4. HMRC's Counter Argument:

• At the time of the transaction, the property was solely residential.

• The paddock’s grazing was informal, serving to maintain the rural ambience rather than for commercial exploitation.

5. Judge's Ruling:

• Judge Gemmell WS believed that the paddock did not serve a significant commercial purpose, making it hard to classify the property as mixed residential and non-residential.

• Regarding the MDR, HMRC argued Gibson's claim was tardy and lacked evidence. The First-tier Tribunal (FTT) agreed, noting that Gibson didn’t amend his SDLT return timely. As a result, his appeal was denied.


If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact or your usual A.C.T. contact.

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