In John Mason v HMRC [2021] TC08216, the First Tier Tribunal (FTT) concluded that a main house and annexe represented a single dwelling. It dismissed the appellants claim for Multiple Dwellings Relief (MDR) as the annexe did not have kitchen facilities and was only accessible with close proximity to the main house.

  • Mr & Mrs Mason purchased a property for £1.9m on 28 February 2019.
  • They competed the SDLT return claiming Multiple Dwellings Relief (MDR) on the basis that the purchase transaction consisted of at least two dwellings.
  • HMRC concluded that the purchase was of a single dwelling and issued a Closure notice denying the relief and assessing an additional tax of £64,250.
  • Following a Statutory review, Mr Mason Appealed the decision to the First Tier Tribunal.

The FTT dismissed the appeal finding that:

  • The property included a main house, a detached annexe and a large garden along with two garages.
  • The annexe was a separate and standalone structure away from the main house, its features were as follows:
    • It was located in the garden or grounds of the main house.
    • It had its own toilet, washbasin and shower.
    • It had lockable entrances.
    • It had electrical, heating and hot water systems which were independent of the main house.
    • It did not have any kitchen appliances, plumbing for a sink and there were no fitted kitchen units.
    • There was no direct line of sight between the main house and the annexe due to the tall hedges in the garden.
    • The annexe could not be accessed without being in close proximity to the main house.
    • At completion, the property formed a single title deed with the Land Registry with one postal address and council tax registration.
  • The FTT concluded that while there was sufficient space in the annexe for kitchen facilities, the complete lack of anything usually associated with a kitchen would lead to a reasonable person viewing the annexe to conclude it was not suitable for use as a separate dwelling at completion.
  • The appellant’s contention that these facilities, including a smart sink that did not rely on separate plumbing, could be installed without involving modification of the property was dismissed.
  • While the annexe was a standalone building located in the grounds of the main house, that it could not be accessed without being in close proximity to the main house meant it did not offer the required security and privacy to be a separate dwelling.

Useful guides on this topic

SDLT: Multiple Dwelling Relief
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed?

SDLT: Multiple Dwellings Relief Relief for Annexes Tool
Stamp Duty Land Tax (SDLT): You are about to purchase two properties in a single transaction. Perhaps this is the purchase of a larger property with an annexe, a granny flat, or some other kind of accommodation, such as a cottage within the grounds of the larger property.

Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights?

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? 

How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal, what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

John Mason v HMRC [2021] TC08216

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