{"id":1622,"date":"2019-08-21T22:42:43","date_gmt":"2019-08-21T22:42:43","guid":{"rendered":"https:\/\/renovateme.co.uk\/blog\/?p=1622"},"modified":"2019-08-22T05:47:48","modified_gmt":"2019-08-22T05:47:48","slug":"stamp-duty-land-tax-case","status":"publish","type":"post","link":"https:\/\/renovateme.co.uk\/blog\/stamp-duty-land-tax-case\/","title":{"rendered":"Stamp Duty Land Tax Case \u2013 \u00a334,950 Refund Refused"},"content":{"rendered":"\n

A \u00a0discussion of a First Tier Tribunal case seeking a refund of stamp duty land tax (SDLT); Hyman v HMRC (2019).<\/p>\n\n\n\n

The Facts<\/strong><\/p>\n\n\n\n

Mr and Mrs Hyman purchased a property as wholly residential described as \u201cThe Farmhouse\u201d for \u00a31,515,000 in October 2015. The property was accompanied by 3.5 acres of land and a barn. On the date of purchase, they submitted an SDLT return with stamp duty payable of \u00a395,550 which was correct if the property was treated wholly as residential.<\/p>\n\n\n\n

The estate agent described the property as \u201cA superb country retreat with historic barn set in over 3.5 acres\u2026\u2026\u2026..it is rare to find as lovely a country home as this in such an attractive yet convenient setting. Surrounded by its own stunning gardens which extend to over 3.5 acres\u2026\u201d.<\/p>\n\n\n\n

The agent representing Mr & Mrs Hyman wrote to HMRC in 2017 making a claim for repayment of \u00a334,950 in overpaid SDLT. The agent argued the property should have been classified as mixed-use rather than residential as the property contained non-residential elements.<\/p>\n\n\n\n

Mr Hyman used the barn to store larger items of equipment;\ntractor, mower, strimmer and various power tools and used these to maintain the\ngarden and meadow, he described them as being \u201cfor agricultural use\u201d. The\nprevious owner had stored similar items in the barn.<\/p>\n\n\n\n

The meadow was used for walking the family dog and keeping a few chickens to produce eggs for their own consumption. Mr Hyman asserted this was agricultural activity. A public bridleway formed part of the property and this was used by 10-50 people per day either cycling, jogging or horse-riding. <\/p>\n\n\n\n

The Law<\/strong><\/p>\n\n\n\n

Great attention was given to the meaning of “residential property” per Section 116 of Finance Act 2003:<\/p>\n\n\n\n

(1) In this part “residential” property means – (a) a building that is used or suitable for use as a dwelling or is in the process of being constructed or adapted for such use or (b) land that is or forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land). Or (c) an interest in or right over land that subsists for the benefit of a building within paragraph (a) or land within paragraph (b). <\/p>\n\n\n\n

The Appeal<\/strong><\/p>\n\n\n\n

Mr and Mrs Hyman argued that the meadow, bridleway and barn\nare not \u201cinterests in or rights over land that subsist for the benefit of a\ndwelling\u201d and therefore do not fall within the definition of \u201cresidential\nproperty\u201d or \u201cgarden or grounds\u201d. In addition, the barn was non-residential and\nwould need planning permission to be converted to residential.<\/p>\n\n\n\n

HMRC responded by saying that \u201cgrounds\u201d are the land\nsurrounding the house which are available as an amenity for the dwelling and\nthe use (non-use) is not relevant. Although the barn is non-residential it\nstill falls within 116(1)(b) \u201cas a building or structure on such land\u201d.<\/p>\n\n\n\n

The discussion turned to dictionary definitions of \u201cgarden\u201d and “grounds\u201d. It was stated that generally speaking any land surrounding a residence which is under the same ownership should be treated as the grounds of the residence unless used for some other purpose. Land used for another purpose at the date of disposal such as agricultural land, commercial woodlands, land under development or land in use for a trade of a business should not be regarded as part of the garden or grounds. <\/p>\n\n\n\n

The following land should not be excluded from gardens or\ngrounds:<\/p>\n\n\n\n