In P N Bewley Ltd v HMRC [2019] TC6951, the First Tier Tribunal (FTT) found that a derelict bungalow was unsuitable for use as a dwelling and was subject to the lower rate of stamp duty land tax (SDLT) for a non-residential building.

From 1 April 2016 SDLT has been charged at a higher rate (an additional 3%) on the purchase of:

  • An additional dwelling by an individual 
  • A dwelling purchased by a company. 

The company acquired a derelict bungalow which had been unoccupied.

  • It contained asbestos, it had no heating, and was generally uninhabitable and unmortgage able.
  • The bungalow was to be demolished and replaced with a new dwelling.

HMRC amended the submitted SDLT return to apply the higher rate, increasing the tax due by £6,000. The company appealed.

The tribunal allowed the appeal.

  • They agreed with HMRC that dilapidation does not in itself stop a building being a dwelling.
  • The issue was whether the building was “used or suitable for use as a single dwelling” (Finance Act 2003 Sch 4ZA). This means, was the building suitable for use as a dwelling on the day of completion. In this case it was not.

The tribunal criticised HMRC for introducing irrelevant arguments. The judge also calculated that the taxpayer had self-assessed the wrong amount and reduced the SDLT due by £500.

Links to our guides:

SDLT: Residential property (dwellings): higher rate

External link:

P N Bewley Ltd v HMRC [2019] TC6951