White and Another
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 September 2023 |
| Neutral Citation | [2023] UKFTT 866 (TC) |
| Court | First-tier Tribunal (Tax Chamber) |
[2023] UKFTT 866 (TC)
Tribunal Judge Anne Fairpo, Shaneem Akhtar
First-Tier Tribunal (Tax Chamber)
Stamp duty land tax (SDLT) – Refusal of claim for refund of tax based on application of non-residential rates of tax – Meaning of residential property – Whether fields formed part of garden or grounds of dwelling – Finance Act 2003 (FA 2003), s. 116(1) – Yes – Appeal dismissed
In White & Anor [2023] TC 08943, the First-tier Tribunal found that there was no evidence to support the appellants’ claim that certain fields did not form part of the garden or grounds of their property and hence that HMRC had been right to refuse their claim for application of the lower non-residential rates of tax.
The appellants (Mr White and Ms Kane) jointly purchased a property in August 2013 and initially paid SDLT on the basis that the subject-matter of the transaction was property that was wholly residential.
In June 2017, they claimed a refund on the basis that the transaction had in fact involved mixed residential and non-residential property, the latter comprising fields surrounding the dwelling. The refund claimed was repaid by HMRC but in February 2018, HMRC opened an enquiry into the claim, which they closed in April of that year, concluding that the property acquired was wholly residential. The review requested by the appellants confirmed the decision and they then appealed to the Tribunal.
Although no reference is made to this in the transcript, the appellants’ claim for a refund of tax must have been made under FA 2003, Sch. 10, para. 34, which provides for claims for relief for overpaid tax, which may be made within four years of the effective date of the transaction (FA 2003, Sch. 10, para. 34B), as amendments to the return would have been out of date. HMRC’s notice of enquiry into the claim would then have been given under FA 2003, Sch. 11A, para. 7.
No evidence was given to the Tribunal by anyone involved with the property transaction or who had had knowledge of the property at the date of the transaction.
Of the factors that the Upper Tribunal (UT) in Hyman v R & C Commrs held had to be considered in deciding whether land forms part of the garden or grounds of the building, the parties put forward four:
- Historic use.
- Use at the time of the transaction.
- Legal constraints on use.
- Geographical factors, such as proximity and the nature of the land.
As to historic use, neither satellite imagery suggesting past agricultural use nor evidence of informal arrangements between the previous owner and nearby farmers were indicative of a commercial activity or purpose.
As to use at the time of the transaction, there was no direct evidence. The appellants claimed the inherent quality of the fields was agricultural and the concept of grounds should not be considered to extend to areas used for arable and livestock purchases. However, the fact that land may from time to time have been used for agricultural purposes did not preclude its nevertheless being part of the grounds. In Hyman v R & C Commrs, the UT had confirmed there was no requirement that land be necessary for the reasonable enjoyment of the dwelling for it to form part of the garden or grounds. For it not to do so it had to have a self-standing function separate from and unconnected with any residential part of the property. There was no evidence that this was so.
As to legal constraints, there was no documentary evidence that there were any agreements with third parties granting them use of the fields. Although it was more likely than not that the appellants had entered into informal arrangements with local farmers, there was no evidence that this had been done as part of the transaction or that entry into those agreements had taken place at the effective date of the transaction.
As to geographical factors, the fields as a whole were not significantly separated from the buildings and gardens and ready access could be had to them from the buildings. Nor did the existence of public footpaths on the property render that part of the property non-residential.
The appeal would be dismissed.
One wonders why this appeal was ever brought, as the appellants had no worthwhile evidence to support their contention. Past Tribunal decisions of which their advisers must undoubtedly have been aware would clearly have indicated they had no chance of success.
Comment by Zigurds G Kronbergs, Senior Tax Writer, Croner-i Ltd.
Mr Boch, counsel, instructed by Cornerstone Tax Limited, appeared for the appellant
Mr Thompson-Jones, litigator of HM Revenue and Customs' Solicitor's Office, appeared for the respondents
[1] This is an appeal against a decision of HMRC to refuse a claim for a refund of Stamp Duty Land Tax (SDLT).
[2] The appellants jointly purchased Horton Hall in Staffordshire, on 23 August 2013. The acquisition was a single transaction, the property consisting of five Land Registry...
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