In P N Bewley Ltd v HMRC  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.
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