The How Development 1 Ltd v The Commissioners of His Majesty's Revenue and Customs [2023] UKUT 00084 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | JUDGE THOMAS SCOTT JUDGE GUY BRANNAN |
| Subject Matter | 30 March 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 04 April 2023 |
Neutral Citation: [2023] UKUT 00084 (TCC) Case Number: UT/2021/000065
UPPER TRIBUNAL
(Tax and Chancery Chamber) The Royal Courts of Justice, Rolls Building,
London EC4
Stamp Duty Land Tax – whether woodland area was part of “the grounds” of a property and
therefore “residential property” – whether necessary for land to be accessible from dwelling
to be grounds – section 116(1)(b) Finance Act 2003 – failure to discuss oral evidence in
delayed decision – whether to remit or re-make decision
Heard on: 23 January 2023
Judgment date: 30 March 2023
Before
JUDGE THOMAS SCOTT
JUDGE GUY BRANNAN
Between
THE HOW DEVELOPMENT 1 LTD Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Patrick Boch, instructed by Cornerstone Tax
For the Respondents: James Henderson and Calypso Blaj, instructed by the General Counsel
and Solicitor to His Majesty’s Revenue and Customs
1
DECISION
INTRODUCTION
1. This is an appeal against the decision of the First-tier Tribunal (the “FTT”) (Judge
Connell and Member Catherine Farquharson) released on 15 January 2021 (the “Decision”).
2. The issue in this appeal is whether the FTT erred in law in deciding that certain woodland
purchased by the Appellant together with a large residential property known as The How (“The
How” or “the property”) formed part of the property’s “garden or grounds” for the purposes of
section 116(1)(b) Finance Act 2003 (“FA 2003”). Since it was common ground that the
woodland did not form part of the property’s “garden”, the real issue in dispute was whether
the woodland formed part of the “grounds” of the property. If it did form part of the grounds,
then a higher rate of Stamp Duty Land Tax (“SDLT”) applied, but if it did not do so then a
lower rate of SDLT was applicable. We were informed that the difference in SDLT between
the two different classifications was £204,250.
3. The FTT heard the appeal on 30 January 2020 and its decision was released almost one
year later on 15 January 2021. The FTT decided that the woodland did form part of The How’s
“grounds” and that, accordingly, the higher rate of SDLT was applicable. The Appellant now
appeals the Decision.
4. Originally, the Appellant sought permission to appeal on the basis that “grounds” should
be construed in accordance with the case-law and HMRC’s Statements of Practice relating to
capital gains tax. The Appellant applied to amend its grounds of appeal on 21 September 2021.
Permission to amend the grounds of appeal was granted by this Tribunal (Judge Richards, as
he then was) on 15 October 2021, but the appeal was stayed pending the decision of the Court
of Appeal in a test case, Hyman & Ors v HMRC [2022] EWCA Civ 185 (“Hyman”). Hyman
concerned the meaning of the phrase “garden or grounds” in section 116(1)(b) FA 2003 and
the application of the above-mentioned Statements of Practice. The issue was determined by
the Court of Appeal in favour of HMRC and, accordingly, in relation to this appeal, the issue
relating to the Statements of Practice fell away, leaving only the question whether the woodland
constituted part of the “grounds” of The How.
THE FACTUAL BACKGROUND
5. The How, a large country house in Cambridgeshire, was purchased by the Appellant on
2 March 2018 for £2.8 million. It comprises approximately 15.5 acres of land, which includes
the main house, a lodge house, outbuildings, areas previously used as market gardens, orchards,
gardens, grounds and the woodland (extending to approximately 2 acres), the boundary of
which meets the River Ouse. The woodland forms part of a larger area of woodland known as
“The Thicket”.
6. The Appellant’s solicitors submitted an SDLT return in which they classified The How
as residential property. Subsequently, however, on 20 March 2018, the Appellant’s tax advisers
wrote to HMRC stating their view that The How should have been classified as mixed-use, on
the basis that the woodland on the south side of the property was non-residential property.
7. HMRC did not accept that any of the land forming part of The How was non-residential,
and on 18 July 2018 issued a closure notice to that effect.
THE LEGISLATIVE FRAMEWORK
8. SDLT is chargeable under FA 2003 on land transactions. Any acquisition of a chargeable
interest is a land transaction: section 43(1). A chargeable interest is an estate, interest, right or
power in or over land: section 48(1)(a). Whether a land transaction is chargeable to SDLT is
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