Crawford
| Jurisdiction | Scotland |
| Judgment Date | 31 January 2022 |
| Court | Bill Chamber (Scotland) |
[2022] FTSTC 3
First-Tier Tribunal for Scotland (Tax Chamber)
Anne Scott, Charlotte Barbour
David D Anderson, Advocate, appeared for the appellants
Kevin Graham, Solicitor for Revenue Scotland, appeared for the respondent
Land and Buildings Transaction Tax (LBTT) – Additional Dwelling Supplement (ADS) – Joint buyers both with own previous residence – One sold after and one sold before purchase of new joint residence – Whether repayment of ADS due – Interpretation of buyer in Land and Buildings Transaction Tax (Scotland) Act 2013, (LBTT(S)A 2013), Sch. 2A, para. 8, 8A – No – Appeal dismissed.
The First-Tier Tribunal for Scotland held that where one joint buyer sold his old residence before the purchase of the new joint residence, no repayment of ADS was due upon the subsequent sale of the other joint buyer's old residence.
Dr Crawford and his life partner (“the appellants”) jointly purchased a property in Edinburgh, intending it to be their only or main residence. They delivered a land-transaction return and paid the tax due, including ADS. Both had previously owned their own separate only or main residence. On the day of the purchase, Dr Crawford also sold his old residence, but did so before the joint purchase took effect. When Dr Crawford's partner subsequently sold her old residence within the permitted 18-month period, the appellants applied for a repayment of the ADS.
Revenue Scotland refused the application, on the grounds that both joint buyers had to satisfy all the conditions for repayment and Dr Crawford's partner's old residence had never been Dr Crawford's only or main residence.
The appellants appealed against the decision.
LBTTA 2013, Sch. 2A, para. 8(1) set three conditions for a repayment of ADS on the sale of a previous main residence to be allowable.
- The disposal of the old residence by the buyer (of the new residence) had to take place no later than 18 months after the purchase of the new residence
- The old residence had to have been the buyer's only or main residence at some time during the 18 months preceding the purchase of the new residence and
- The new residence has to have been occupied as the buyer's only or main residence.
Where there were joint buyers, Revenue Scotland's interpretation was that all (in this case, both) buyers had to satisfy all of the conditions for a repayment to be due, especially in view of Sch. 2A, para. 8A, which relaxed the conditions slightly where the joint buyers were spouses, civil partners or cohabitants. It was accepted that at the effective date of the purchase, the appellants did not fall into any of these categories.
Furthermore, in Goudie [2018] FTSTC 3, an earlier Tribunal had upheld a refusal to repay ADS where one of the joint buyers had never resided in the old residence of the other.
For the appellants, it was argued that this interpretation was erroneous and absurd. The proper construction should be that “buyer” in para. 8(1) should be interpreted as meaning the buyer whose ownership of the additional property gave rise to the liability to ADS.
Although the Tribunal was not bound by the decision in Goudie [2018] FTSTC 3, it agreed with the reasoning there. The requirements for repayment of ADS had been tightly drawn. Although Sch. 2A, para. 8A did not apply to the appellants, it was relevant when looking at what the legislative intention had been.
The Scottish Government's position was clear. In its consultation paper on ADS, published in December 2021, it had stated in para. 3.7 that: “For joint buyers, in determining whether a repayment of the ADS can be claimed … all buyers have to satisfy the three conditions … unless the specific provisions … in para. 8A of Schedule 2A apply.”
Furthermore, LBTT(S)A 2013, s. 7 defined a “buyer” as a person who has given consideration for or was a party to, the transaction. There was no doubt that Dr Crawford was a buyer.
Revenue Scotland's decision was therefore upheld, and the appeal would be dismissed.
Had it not been for Goudie, the appellants' interpretation was at least arguable, but the combined weight of the other legislative provisions and the intention behind them were too persuasive. Timing can be everything. As the Tribunal pointed out, had Dr Crawford sold his old residence, even if only a scintilla of time, after purchasing the new residence, the conditions for the repayment would have been met.
[1] This is an appeal against Revenue Scotland's decision to amend to NIL the Appellants claim for repayment of the Additional Dwelling Supplement (“ADS”) in the sum of £12,200. That ADS had been charged under section 26A and Schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013 (“the Act”). The Appellants sought the payment in terms of section 107 of Revenue Scotland Tax and Powers Act 2014 (“RSTPA”).
[2] For all the reasons set out below the appeal is dismissed.
[3] On 17 December 2019, Dr Crawford and Ms Scott (hereinafter together “the Appellants”) purchased a property in Edinburgh (“the chargeable property”).
[4] Prior to that purchase the Appellants both owned their own properties. Dr Crawford owned property in Edinburgh (“the first property”) and Ms Scott owned a property in Crieff (“the second property”). Prior to the purchase of the chargeable property, the Appellants both resided in their own properties. They were not cohabitants including inter alia for the purposes of paragraph 8A Schedule 2A of the Act.
[5] On the date of the purchase of the chargeable property, Dr Crawford sold the first property. The purchase of the chargeable property was a notifiable transaction and the Appellants made a Land and Buildings Transaction Tax (“LBTT”) return and paid the LBTT including the ADS.
[6] Ms Scott sold the second property on 5 February 2021 which was within the period of 18 months from the date of purchase of the chargeable property. The Appellants' agent made a claim for repayment of the ADS dated 22 February 2021.
[7] On 5 March 2021, Revenue Scotland rejected that claim for repayment on the basis that where there were two buyers, then all of the repayment conditions must be met by all of the buyers and the second property had never been the main residence of Dr Crawford.
[8] The Appellants' agent responded that day pointing to Revenue Scotland's website which contained “example 71” being a worked example of a hypothetical factual situation where a repayment of ADS would be made. Example 71 was headed:–
Example 71: reclaiming ADS paid after all joint buyers sell main residences
[9] Revenue Scotland replied that day pointing out that in the worked example, neither main residence was sold at the time of purchase. The example was predicated on the purchasers buying a new property whilst still retaining both of their separate main residences. Only when both premises were sold thereafter were they entitled to the repayment.
[10] On 1 April 2021, the Appellants' agent sought a review of Revenue Scotland's decision on the basis inter alia that:–
- It was accepted that the Appellants' position was different to that in the worked example as Dr Crawford had sold his previous main residence before the chargeable property was purchased.
- The claim for repayment fell squarely within the policy intention of the legislation. The use of the word buyer in paragraph 8(1)(b) Schedule 2A of the Act can, and should, only refer to any buyer who has failed to meet the requisite conditions at the time of purchase because paragraph 8 does not reference joint buyers.
[11] On 29 April 2021, Revenue Scotland issued their view of the matter and upheld the decision rejecting the repayment claim pointing out that paragraph 8 should be read in the context of paragraph 8A which was inserted by the Land and Buildings Transaction Tax (Additional Amount – Second Homes Main Residence Relief) (Scotland) Order 2017.
[12] The Appellants' agent responded on 12 May 2021 pointing out that the Appellants had never cohabited so paragraph 8A was not in point. It was the second property that had triggered the ADS and it had now been sold and a purposive interpretation should be applied to the legislation to produce a common sense result.
[13] On 21 May 2021 the review conclusion letter was issued by Revenue Scotland upholding the decision and pointing out that the criteria for imposing the ADS and for repayment were different.
[14] On 18 June 2021, the Appellants appealed to the Tribunal and lodged a 19 page Note of Argument from Mr Anderson.
[15] The relevant provisions are as follows:
(1) This schedule applies to a chargeable transaction if the following conditions are...
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