SDLT and a fishy business

In Mr Brzezicki v HMRC [2024] TC9294 the tribunal was divided as to whether a trout stream with an island was residential land for Stamp Duty Land Tax (SDLT) or not. The chair confirmed the appeal using her casting vote.

Mr Brzezicki, a keen fly fisherman, purchased a residential property set in six acres of land, two acres of which included a trout stream with an island and a fisherman's hut.

• He paid Stamp Duty Land Tax (SDLT) at the Higher SDLT Residential rate while still trying to sell his old property.
• He later recalculated the payments and claimed a tax refund on the basis that part of his new property was Mixed-use, and partly Non-residential.
• HMRC rejected the claim and Mr Brzezicki appealed.

On appeal, the FTT considered the facts:

• The proximity of the land to the residential property.
• Whether it forms part of the garden and grounds of the property.
• Its historic use and use at the time of purchase and whether it was subject to restrictions.

It noted that:

• The land was an island in a chalk stream connected to the rest of the grounds of the residence by two small footbridges.
• The stream was man-made and included a sluice. It was an ideal breeding ground for trout. There were fishing rights attached and there was evidence that a fly fishing business further downstream benefited from the trout too.
• Mr Brzezicki had cleared out the stream and repopulated it with baby trout to set up an angling business.

Based on the facts of this case at the date of the transaction, Judge Heather Gething decided that:

• The land to the west of the carrier stream did not as a matter of fact form part of the garden and grounds of the property.
• The carrier stream is a factory to produce brown trout to be fly-fished in the river Meon and consequently, the carrier stream and island bounded by the carrier stream and the river Meon, is non-residential land.
• Fishing rights attaching to the land at completion did comprise a right in or over land that subsisted for the benefit of the six-bedroom dwelling house. The fishing rights attached to the land forming part of the island which was separated from the dwelling by the carrier stream. The fishing rights subsisted for the benefit of the land forming the island.

The Member, Ian Shearer, had a dissenting decision. The lay member of the tribunal did not agree with Judge Gething's decision and therefore recorded his dissenting opinion.

• Weighing up the various factors and the evidence, he did not agree that the land was residential, he regarded it as forming part of the grounds of the property.
• He did not agree that it was a fish farm at the relevant date but was simply an overgrown stream at that time and there was no evidence of any commercial use.
• He considered that at the completion of the purchase, the carrier stream and land to the west of it formed part of the garden or grounds of the house and were residential property.

Judge Gething held the casting vote, and the appeal was allowed.

Editorial comment

Island fishing farm or residential grounds? Were the fishing rights significant? Did a fishing business exist at the relevant date? Is there a point of law to appeal here? That's for HMRC to decide if it wants to appeal this one, wait and see.

In his appeal, the taxpayer also tried to claim Multiple Dwellings relief (MDR) for the hut and to also claim back his excess SDLT when he sold his original home but he was time-barred on both counts. A strange quirk of the SDLT rules.

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

SDLT: Residential property higher rates
A guide to the Stamp Duty Land Tax (SDLT) higher rate charge on residential property, when it applies and what reliefs are available to exempt buyers from the charge.

SDLT: MDR & Annexes Tool
MDR is no more, this Stamp Duty Land Tax (SDLT) Tool is handy if you are dealing with past claims and appeals. If you bought two or more properties in a single transaction use this tool to see if you met the qualifying conditions and you may be able to claim both Multiple Dwellings Relief and relief from the Higher Rate Charge.

SDLT: Multiple Dwelling Relief and Annexes
What was Multiple Dwellings Relief (MDR)? When did it apply and how is it claimed?

External links

Mr Brzezicki v HMRC [2024] TC9294

Return to Ross Martin Tax: SME Tax News 3 October 2024