Gibson
| Jurisdiction | UK Non-devolved |
| Judgment Date | 12 July 2023 |
| Neutral Citation | [2023] UKFTT 648 (TC) |
| Court | First-tier Tribunal (Tax Chamber) |
[2023] UKFTT 648 (TC)
Tribunal Judge Ruthven Gemmell WS
First-Tier Tribunal (Tax Chamber)
Stamp duty land tax (SDLT) – Whether paddock and office above garage purchased with large property constituted non-residential land – Finance Act 2003 (FA 2003), s. 116(1)(b) – No – Whether multiple-dwellings relief (MDR) could be claimed in the alternative outside permitted period and not in prescribed form – FA 2003, s. 58D – No – Appeal dismissed
In Gibson [2023] TC 08869, the First-tier Tribunal found that a paddock let for grazing on an informal basis and an office above a garage in the grounds used for running a business nevertheless formed part of the garden or grounds of the property, all of which was consequently residential. In a separate and related matter, the appellant was not entitled to make an alternative claim for multiple-dwellings relief outside the prescribed form and time limit.
The appellant, Mr Gibson, purchased a large property in Warwickshire under two titles. The land comprised in the first title was a six-bedroom house; a double garage with office above it; a two-bedroom self-contained barn conversion with bathrooms, kitchen and dining area; a movable outbuilding containing two stables and a tack room; and a garden adapted as a market garden, all on 0.2 ha (0.5 acres). The land comprised in the second title was a paddock, approximately 0.85 ha (2 acres) in area.
The whole of the property had previously been used for agricultural purposes, but this use had ceased in 2003, although the garage was still considered for planning purposes to be on agricultural land. Moreover, there was still a right of way over the land by foot or with vehicles for agricultural and gardening purposes. The appellant used the office above it to run a business and intended to run another there also. The paddock was separated from the other land by a ha-ha and elsewhere by a fence. It had been used for grazing sheep belonging to a neighbour before its sale to the appellant, who wished to continue to let it for grazing but had only an informal agreement with another farmer to do so in spring in return for joints of lamb.
The appellant had filed the land-transaction return and paid tax on the basis that the property was mixed-use (specifically with reference to the paddock and the office). After enquiring into the return, HMRC contended that the whole property was residential and by virtue of a closure notice amended the appellant’s return to show the additional tax payable. A subsequent HMRC review confirmed its decision.
The effective date of the purchase transaction was 27 November 2018. During the exchange of correspondence with HMRC, the appellant intimated (on 20 December 2020) that there might be grounds for a claim to MDR but made no formal attempt to do so.
The mixed-use issue
- There was no quantitative limit on the extent of the garden or grounds of a property, nor was reasonable enjoyment of land a requirement for it to fall within the definition of residential property (Hyman v R & C Commrs[2022] BTC 3).
- The paddock and the office were continuous with the undisputedly residential 0.2 ha and all the buildings and structures within it.
- There was no history of use for agricultural purposes after 2003 other than the use of the paddock for four years prior to its acquisition by the appellant
- The paddock did not have a self-standing function, namely a commercial purpose such as grazing. Informal grazing in exchange for joints of lamb did not constitute a commercial agreement.
- Rights over land, particularly in a rural context, could exist without affecting the status of land as residential to a significant extent (Faiers[2023] TC 08768).
- The garage was virtually adjacent to the dwelling house and stood on land that was indisputably residential. The use of its upper floor as an office was therefore irrelevant (Brandbros[2021] TC 08126) as was the classification of the land for planning purposes as agricultural.
The MDR issue
FA 2003, s. 58D provides that MDR may only be claimed by way of a land-transaction return or amended return. The original return had not done so and the time limit for amending the return expired on 27 December 2019. The appellant had therefore failed to make a claim to MDR in the prescribed form and within the prescribed time limit.
The appeal was therefore dismissed.
On the face of it, this mixed-use appeal had more going for it from the taxpayer’s point of view than many, but what proved fatal to it was probably the lack of a commercial agreement to let the paddock. Interesting also that the Tribunal cited Brandbros (dismissed as irrelevant, on spurious grounds as I would maintain, by the Tribunal judge in Suterwalla) to find that use for commercial purposes of a building or part of a building that stands on residential land does not of itself thereby render it as non-residential.
On the facts, a claim for multiple-dwellings relief would have stood a very good chance of succeeding, had the taxpayer been better advised.
Comment by Zigurds G Kronbergs, Senior Tax Writer, Croner-i Ltd.
The appellant represented himself., appeared for the appellant
Christopher Thompson-Jones, litigator of HM Revenue and Customs' Solicitor's Office, appeared for the respondents
[1] The form of the hearing was by video, all parties attended remotely and the remote platform used was the Tribunal video hearing system. The documents which were referred to comprised of a Hearing bundle of 268 pages, skeleton arguments for both parties, a series of plans and a copy of a Knight Frank sale particulars/brochure.
[2] Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.
[3] The Appellant, James George Gibson (“JG”), appealed against a closure notice issued by the Respondents (“HMRC”) on 24 January 2022. The closure notice was in the sum of £83,000 of Stamp Duty Land Tax (“SDLT”).
[4] The closure notice was issued to JG in relation to Doe Bank Manor, Lower End, Priors Hardwick, Warwickshire (“the Property”) which was purchased for £1,595,000 on 10 January 2019.
[5] At the hearing JG confirmed that he, and his wife and children, were in occupation of the Property on 27 November 2018 but for a number of reasons the Completion date was delayed to 10 January 2019.
[6] The Property comprised of two Land Registry titles numbered WK425880 and WK426348 (“the Property”). The former comprised of (1) a six bedroom house over two storeys ; (2) a double garage with, an “office/studio” above it, accessed by an external staircase; (3) a two bedroom self-contained barn with two bathrooms, open plan living, dining and kitchen area and a mezzanine level with a feature arch window allowing for views over the rear; (4) an outbuilding containing two stables and a tack room with an internal floor area of 93m² which could be moved on “skids”; and (5) a garden in which JG had created a “market garden” (all collectively “the 0.5 acre”).
[7] The latter title represented the field/paddock (“the Paddock”) of approximately two acres.
[8] HMRC concluded that the residential rate of SDLT applied to the Property acres in total and that the use of the property was wholly residential at the date of acquisition.
[9] A SDLT return was filed on behalf of JG on 10 January 2019 on the basis that the property transaction was “mixed-use” and the total amount of tax due was calculated at £69,500. No claim for Multiple Dwellings Relief (“MDR”) was made.
[10] Based on the transaction date of 10 January 2019, the deadline for amending the SDLT return expired on 9 February 2020.
[11] On 7 February 2020, JG confirmed that no consideration was received for sheep grazing on the Paddock and on 10 March 2020, he emailed HMRC to confirm that farmers had used the land for the previous four years.
[12] On 6 July 2020, HMRC issued a letter concluding that the land consisted entirely of residential property and correspondence was then exchanged.
[13] On 30 November 2020, HMRC issued a closure notice in terms of paragraph 23, Schedule 10 to the Finance Act 2003 concluding that the Property was residential and that higher rates of SDLT applied representing an increase of £83,500 to £153,000.
[14] On 20 December 2020, JG emailed HMRC disagreeing with the decision and intimating that there was at least a claim for MDR.
[15] On 01 March 2021, JG appealed against HMRC's decision and on 29 March 2021 HMRC provided their review of the matter concluding the property was residential. On 30 September 2021, HMRC issued its statutory review conclusion letter upholding the decision that the Property was residential.
[16] This letter explained that HMRC would not object to a late appeal if it was made within three months of the end of the 30-day appeal period, by 30 January 2022.
[17] On 24 January 2022 JG filed his notice of appeal with the First-tier Tribunal (“FTT”).
[18] See Appendix A
[19] See Appendix B
[20] The Burden of proof is on JG to demonstrate that the Property has been incorrectly classified as wholly residential and failure to discharge that burden will result in the Closure Notice standing good. The standard of proof is on the ordinary civil test on the balance of probabilities.
[21] The Property was marketed by two estate agents and their respective sale particulars/brochures were before the Tribunal.
[22] The Property had some time previously contained a series of farm buildings and farmyard, but these had fallen into a state of disuse from a farming perspective and planning consents were obtained to create new buildings. Photographs were produced of the previous...
To continue reading
Request your trial
-
Kozlowski
...the garage building including the office space in this case is residential irrespective of its use or suitability of use. [63] In Gibson[2023] TC 08869, the FTT said, at [133]: [133] The garage was on the 0.5 acre which was residential and the use to which the office/studio above the garage......