LBTT: couple tripped up by inflexible additional dwelling rule

In Dr C Ewan H Crawford v Revenue Scotland [2022] FTSTC3, the First Tier Tribunal for Scotland (FTT) found that two people purchasing their first house together did not meet the conditions for a repayment of Additional Dwelling Supplement as one of them had failed to sell his old home within the right timeframe, ironically they would have met the conditions if they had shared a home pre-purchase.

• On 17 December 2019, Dr Crawford and Ms Scott (the Appellants) purchased a property in Edinburgh and moved in together. Additional Dwelling Supplement (ADS) was paid as Ms Scott had an additional property on the day of acquisition.
• On the date of purchase, Dr Crawford sold his former property which he had lived in alone.
• Ms Scott sold her property in February 2021, which prior to the purchase of the new property in December 2019, she had lived in alone.
• A claim for repayment of ADS was made following the sale of Ms Scott’s property.
• Revenue Scotland rejected the claim on the basis that as there were two buyers of the new property, the repayment conditions required that Ms Scott’s property was the main residence of Dr Crawford, which as a matter of fact it wasn’t.
• The Appellants pointed out that Revenue Scotland guidance stated ADS would be repaid where two purchasers had acquired a new property while retaining their separate main residences which were then sold within 18 months of the purchase.
• Revenue Scotland pointed out this was not the case here as Dr Crawford had sold his main residence on the same day as the new residence was purchased not after.

The Appellants appeal to the FTT was dismissed as:

• All buyers must satisfy the applicable conditions for the repayment of ADS.
• Had Dr Crawford sold his property the day after the purchase of the new property a repayment of ADS would be due.
• Similarly, if the Appellants had cohabited in Ms Scott’s property, ADS would have been repayable.
• As Dr Crawford was a purchaser of the new property and he did not sell his prior main residence in the relevant period after the new property was purchased the ADS legislation denied the repayment.
• The legislation was working as intended in the Appellants situation and the Tribunal has no jurisdiction to consider whether this led to a fair result.

Comment

The Scottish Government has launched a Call for evidence that seeks views on the operation of the ADS. One would expect that the case of Dr Crawford could be a prime example of the rigid nature of the legislation leading to results that could be described as inequitable.

Useful guides on this topic

LBTT: Land and Buildings Transaction Tax (LBTT)
What is Land and Buildings Transaction Tax (LBTT)? What are the rules?

LBTT: Additional Dwelling Supplement
What is the Additional Dwelling Supplement for the Land and Buildings Transaction Tax? When does it apply? 

Call for evidence: Additional Dwelling Supplement
The Scottish Government has launched a call for evidence ‘The Land and Buildings Transaction Tax Additional Dwelling Supplement’ which seeks views on the operation of the Additional Dwelling Supplement (ADS).

External links

Dr C Ewan H Crawford v Revenue Scotland [2022] FTSTC3