In Espalier Ventures Property Ltd v HMRC [2023] TC8914, a claim that the purchase of three garages and a right of access to communal gardens were separate non-residential property for SDLT failed to impress the First Tier Tribunal (FTT). It was found that the interests were residential and the higher rate of SDLT applied.

  • The taxpayer, a property developer, had paid Stamp Duty Land Tax (SDLT) of £257,000 on the purchase of three garages and a flat with access to a communal garden.
  • It had paid SDLT at the mixed-use rate provided in Table B of section 55 Finance Act 2003 (FA03).
  • It was claimed that the garages had been used for some self-storage but there was little evidence of this alternative use.
  • HMRC considered that the land and rights attaching were all Residential and raised an assessment to SDLT at the Residential Higher rate of £716,250.
  • The taxpaying company Appealed to the FTT.

The tribunal had little difficulty deciding that the garages existed for the benefit of the nearby dwellings.

Technical arguments were put forward by the taxpayer to the effect that the interest in the Communal Garden was something to be considered in isolation from the Flat.

The tribunal rejected these and decided that the interest met the definition of an easement which is appurtenant to the principal interests in the flat and the share in the freehold acquired and that it is not capable of being considered separately from them.

As the interests were not an independent main subject matter, they must then form an ancillary part of the main subject matter being that of the flat, which is accepted as a dwelling.

Having found that both the access to the communal garden and the interest in the garages fell into paragraph (c) of Section 116 - Finance Act 2003 being an interest in or right over land that subsists for the benefit of a residential building, the appeal was dismissed.

Useful guides on this topic

SDLT: Residential property & dwellings
What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies? What gardens and grounds are subject to higher rates of SDLT?

SDLT: Amending returns
How do I amend an SDLT return?  When can I amend an SDLT return?  How do I claim and SDLT refund?  How do I deal with contingent consideration?

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

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

External links

Espalier Ventures Property Ltd v HMRC TC8914

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