Stamp Duty Land Tax

New considerations for Stamp Duty Land Tax

The recent First Tier Tribunal (FTT) case of Withers v HMRC [2022] concluded that the taxpayer was right to treat their purchase of Lake Farm, comprising a main house, separate annexe and 39 acres of gardens, woodlands and fields, as mixed-use.

The Stamp Duty Land Tax (SDLT) at stake was £98,000 and Mr Withers represented himself very successfully, as the vast majority of these cases turn in HMRC’s favour.

13th December 2022

HMRC’s original stance

On submission of the SDLT return, HMRC contended that all the 39 acres of land, which included 20 acres of fields, were grounds of the main house.  As a result, the entire transaction should be based on residential rates.

Mr Wither’s argument

Was it residential property?

Mr Withers argued that the fields were not residential property because they had been let to a local farmer for grazing his sheep.

Who cares for the woodland?

The woodlands were under the care of the Woodland Trust, which imposed obligations and restrictions on the owner.

How involved are the occupiers?

All this land could be accessed and operated independently from the house without any disruption to the occupiers of Lake Farm.

Does it have a self-standing function?

The Tribunal made reference to a previous mixed-use case in which the judge stated that, for land to be grounds, it had to serve as an appendage to the dwelling as opposed to having a self-standing function, being that of grazing land.  The woodlands had a self-standing function of improving the environment therefore neither it nor the grazing land could be argued to have a residential use

The key points to take away
  • The main house was not a country mansion. The 12 acres of land that Mr Withers accepted as being garden grounds was considered more than sufficient for a house of its size.
  • There was consistent and long-term use of the fields as agricultural grazing land for commercial use. The fact that the land was let at a peppercorn rent did not preclude the arrangement being commercial since the previous owner did not have to incur costs on hedge cutting, fence repairs, etc. as this was the responsibility of the farmer.
  • Whilst this case offers some good news for the taxpayer, the decision is not binding and HMRC may still appeal.

Get in contact

Every case must be decided on its own particular facts and that is why professional help is advised. If you have your own Stamp Duty Land Tax query do get in touch with one of the team.  click here…