In Elvis Ricardo Anthony Mohammed v Revenue Scotland [2022] FTSTC4, the First Tier Tribunal for Scotland (FTT) dismissed the taxpayer's appeal against the refusal to refund Additional Dwelling Supplement (ADS) paid on the acquisition of a second property after the sale of a prior main residence.

  • Mr Mohammed owned a property in England where he lived with his family prior to being sent to Brazil by his employer.
  • On returning to the UK for employment in Scotland he acquired a property by lease in February 2015.
  • In March 2019 he purchased a property in Scotland shortly before giving up the leased property.
  • As Mr Mohammed owned two properties, the property in England and the newly acquired property in Scotland he paid ADS.
  • He sold the English property on 13 November 2020.
  • He attempted to reclaim ADS as he had sold his prior main residence.
  • Revenue Scotland denied the reclaim as the English property was not his main residence for any of the 18 months prior to the purchase of the Scottish property.
  • Mr Mohammed appealed to the FTT.

The FTT dismissed the appeal finding that:

  • As the English property had not been his main residence at any time in the 18 months prior to the purchase of the Scottish property he could not reclaim ADS as he had not met the legislative conditions.
  • Despite expressing sympathy for the taxpayer, the FTT had no discretion and must apply the law as enacted.

Comment

This is the third recent ADS case that has highlighted how precisely drawn the ADS repayment provisions are and how they have led to results that the taxpayers in each have considered unfair. It is also the third time the tribunal judge has expressed sympathy for the taxpayer.

The Scottish Government has launched a Call for evidence that seeks views on the operation of the ADS and one would expect this is another case that will be flagged.

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? 

LBTT vs SDLT: Comparing the rates and additional dwellings charge
How does LBTT compare to SDLT? What are the key differences?

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

Elvis Ricardo Anthony Mohammed v Revenue Scotland [2022] FTSTC4


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