No SDLT higher rate relief if combining two apartments

In Moaref & Mozhdeh v HMRC [2020] TC7873, the First Tier Tribunal (FTT) dismissed a claim for the Replacement Dwelling Exemption which would have granted a refund of the higher rate of Stamp Duty Land Tax (SDLT) on the purchase of a property replacing their old main residence.

Higher rates of SDLT are due on the purchase of residential property where certain conditions are met. Of these, Condition D is met only if the purchased property is not a replacement for the buyer’s only or main residence. 

The appellants, purchased two properties with the intention of combining them to form a single residence to replace their existing main residence which they later sold.

• The appellants purchased Number 31 on 24 May 2017 and paid the higher rate of SDLT.
• The appellants purchased Number 38, a property adjoining Number 31, on 6 June 2017 and paid the higher rate of SDLT.
• The appellants sold their old main residence on 5 June 2018.
• On 30 July 2018 they submitted amendments to the SDLT returns for Numbers 31 and 38 claiming a repayment on the basis that the purchased properties were to be amalgamated to form a single dwelling which would become their main residence.
• HMRC opened enquiries into both returns.
• HMRC allowed a claim for the relief on Number 31 but rejected it for Number 38.
• The appellants appealed to the FTT.

The FTT found that:

• The appellants and their children were living together in the two properties, using access via an outdoor balcony and had obtained planning permission to combine them.
• The appellants did not view either Number 31 or 38 on their own as a suitable residence for the family.
• Condition D was with reference to the purchase of a single dwelling, so it required the appellants to intend to use each purchased dwelling as their only or main residence.
• Neither Number 31 nor Number 38 were intended to be the appellants’ only or main residence. It was the combined property which was to be that residence.
• While both properties were occupied as a residence, neither should be treated individually as their only or main residence.
• Condition D was met and no higher rate SDLT relief was due on either property.
• HMRC had wrongly allowed Replacement Dwelling Exemption on Number 31 but were out of time to amend the assessment.

The appeal was dismissed.

Useful guides on this topic

SDLT: At a glance, Stamp Duty Land Tax, rates and allowances
What is Stamp Duty Land Tax (SDLT)? What is the rates of Stamp Duty Land Tax (SDLT)?

SDLT: Residential property higher rates
What Stamp Duty Land Tax (SDLT) rate applies for the purchase of a second home? What is the SDLT higher rate? Are there any reliefs from the SDLT higher rate?

External links

Moaref & Mozhdeh v HMRC [2020] TC7873