In Amarjeet and Tajinder Mudan v HMRC [2025] EWCA Civ 799, the Court of Appeal (CoA) agreed with an earlier Upper Tribunal (UT) decision that, despite a property being dilapidated and vandalised at the time of purchase, it remained 'residential' for Stamp Duty Land Tax (SDLT).
Mr and Mrs Mudan purchased a severely deteriorated property intending to renovate it into a family home.
- It was purchased with the benefit of a residential mortgage secured on the property.
- When Mr Mudan made initial visits to view the property, it was being lived in.
- Works completed after purchase included rewiring, a new boiler, replacing windows and tanking the basement.
- The taxpayers paid SDLT at residential rates, later Amending their SDLT return to claim a refund of SDLT on the basis that the property was not fit for human habitation and was non-residential at the time of purchase.
- HMRC rejected the claim.
Mr Mudan appealed HMRC's decision at both the First Tier Tribunal (FTT) and the Upper Tribunal (UT):
- The First Tier Tribunal (FTT) agreed with HMRC, concluding that the house was suitable for use as a dwelling and therefore was a residential property.
- The UT again agreed with HMRC, deciding that it was clear that the property had been and always was suitable for use as a dwelling; it just needed to be repaired, which fitted into the scheme of the legislation and as such, the FTT had applied the correct tests.
- Mr and Mrs Mudan appealed to the Court of Appeal (CoA) on the basis that both the FTT and the UT had misinterpreted the definition in s.116 Finance Act 2003, which states that to qualify as residential property, it must be 'suitable for use' as a dwelling.
The CoA found that:
- In general terms, an acquisition of an interest in a building, particularly the purchase of a building intended to be a family home, is a medium-term enterprise; as such, there should be no restriction to a 'snapshot' on a particular date. The full picture should be considered in giving a clear assessment.
- Property which is wholly unfit for immediate occupation still falls within the definition of 'residential property' if it is being constructed for use as a dwelling.
- It would be irrational to conclude that a higher rate of SDLT would apply to a potential building still requiring a roof or a staircase, but not to a building which had these features but required rewiring or a new kitchen.
- Property used as a dwelling is residential regardless of how dilapidated or unmodernised it is.
- In the ordinary English language, residential property would typically mean property that people live in; if such a property were undergoing large renovation works and not being lived in, the ordinary English speaker would not remove the property from the category of 'residential'.
- The UT interpretation of the legislation was legally sound.
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 garden 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 an 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
Amarjeet and Tajinder Mudan v HMRC [2025] EWCA Civ 799