Nice try! A house buyer failed in a claim that he had purchased two dwellings for SDLT. The tax tribunal was not convinced that 'rooms over a garage' had sufficient refinements to be either suitable for use as a dwelling nor were they in the process of being adapted for such use.

To claim that a building is a dwelling for Stamp Duty Land Tax (SDLT) purposes, a property buyer must be able to show that it is either suitable for use as a dwelling or be in the process of being adapted for such use on completion.

In Jonathan Ralph v HMRC [2023] TC08969, the taxpayer purchased a property for £3,300,000 and self-assessed the amount of SDLT payable to be £193,500 after claiming Multiple Dwelling Relief (MDR).

Apart from the main house, there was a detached three-bay garage with rooms over on the first floor. Following the purchase, the Appellant gave the Annex a make-over and installed a fitted kitchen.

HMRC denied MDR and issued a Closure Notice to that effect. The taxpayer Appealed the decision.

The case was heard by the First Tier Tribunal (FTT) which found that:

This building was described in several ways by the parties, including 'the Cottage' and 'the gym', but the FTT preferred to use 'the Annexe'.

  • The Annexe had central heating, fibre broadband, mains electricity, gas, water and a separate zone on the house alarm system.
  • Its utilities did not have separate meters and it was not separately registered for Council Tax.
  • The kitchen facilities consisted of a microwave, kettle, toaster, fridge, dustbin, server table, kitchen table and a bench.
  • The main room was fitted out with gym equipment, a TV and a sofa.
  • There was a bathroom with a toilet, basin, shower and heated radiator.
  • It did not have the high-voltage electricity connections required to fit a cooker, electric oven or hob.
  • The seller's son had used it as a gym.

On completion, the property was being used for storage. The seller allowed the Appellant to store some of their household goods bought and delivered before completion.

Importantly, the FTT found that no conversion work had started.

The FTT concluded that there was no use of the Annex as dwelling before or on completion, and that no works were in progress on the day of completion. 

The MDR claim failed as the main subject matter did not consist of an interest in at least two dwellings.

Useful guides on this topic

SDLT: Stamp Duty Land Tax, start here
What is SDLT? What are the SDLT rates? What is exempt from SDLT? What reliefs are available? When are returns due? When can you amend a return?

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

How to appeal an HMRC decision
Disagree with an HMRC decision? How do you 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?

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

External links

Jonathan Ralph v HMRC [2023] TC08969