In Fish Homes Ltd V HMRC [2020] TC7666, the First Tier Tribunal (FTT) held that the purchase of a non-commercially lettable flat was a dwelling for the purposes of Stamp Duty Land Tax (SDLT).

  • The company purchased a two bedroom flat in a block in Greenwich only to discover that the block was covered in potentially flammable cladding. 
  • Due to the cladding, the property could not be rented out under a formal tenancy agreement. Instead, it was let informally to a shareholder's daughter.
  • An SDLT return was submitted on the basis that the acquisition was a Residential transaction. Relief was claimed under the High-Value Residential Transaction Charge as it was acquired for a rental business.
  • HMRC enquired into the return and denied the relief from the high-value residential rate as the daughter, being a non-qualifying individual, resided in the flat within the three-year period after purchase.
  • The taxpayer Appealed against the decision and after a review, the appeal was notified late to the Tribunal.
  • The taxpayer disputed that the acquisition of the flat was not a residential transaction on the grounds that the cladding meant that the flat was not suitable for use as a dwelling and as such not within the scope of the high-value charge.
  • The taxpayer did not submit amended SDLT returns.

The FTT case considered the definition of dwelling:

  • At the effective date of the purchase it had completed with vacant possession. It could not, therefore, be said that it was at that time a building which ‘is used’ as a dwelling.
  • The judge had to determine whether a defect in the building resulted in it not being a dwelling or suitable for use as a dwelling.
  • Changes in building regulations or failure for a building to comply with building regulations would not necessarily change the characteristics of the building and would not make it incapable or unsuitable for use as a dwelling.
  • The daughter did not find the risk imposed by the cladding a prevention from residing in the flat and using it as a dwelling.

The FTT found:

  • The flat was a dwelling for the purposes of SDLT.
  • The high-value charge will apply without any rental business relief available as the condition was not met within the three-year period of purchase.


SDLT: What is residential property?
How do HMRC define a residential property, what reliefs are available and how does it impact CGT?

SDLT: Residential property higher rate: At a glance
From 1 April 2016 SDLT is charged at a higher rate on the purchase of an additional dwelling by an individual. or a dwelling purchased by a company. 

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Fish Homes Ltd V HMRC [2020] TC7666