Taxpayer victory bucks trend in SDLT row

SDLT rates are different for residential and non-residential property. The non-residential rates are generally more favourable, particularly for more expensive property as the highest rate is 5%. An important point with classification is that where a single property has a “mixed use”, i.e. some residential and some non-residential, the non-residential rates apply.

Non-residential property includes:

• commercial property, e.g. shops or offices
• property that isn’t suitable to be lived in
• forests
• agricultural land that’s part of a working farm or used for agricultural reasons
• any other land or property that is not part of a dwelling’s garden or grounds
• six or more residential properties bought in a single transaction

A mixed property has both residential and non-residential elements, e.g. a flat above a shop. HMRC has become increasingly concerned about spurious refund claims, e.g. where a public path over part of the grounds was argued to mean the whole property was mixed. However, in the case of Marie Guerlain-Desai (G) the tribunal sided with the taxpayer. G purchased a six-bedroom house situated in around 32 acres of land. Twelve of these acres were mature woodland. G had initially paid SDLT at the residential rates, but claimed a refund on the grounds that the woodland was much more extensive than a typical house of that character. The woodland had public access, and G had obligations to maintain it meaning it was a financial burden on her.

Perhaps crucially, G provided substantial photographic evidence of the woodland to back up her assertions. In contrast, it transpired that HMRC had not sent anyone to visit the site, and had made claims that were completely at odds with the evidence G presented. The tribunal concluded that the woodland was not part of the dwelling’s ground or gardens, and allowed the appeal.