On 18th March 2021, the Upper Tribunal (Tax and Chancery Chamber) released its decision in the appeals of Hyman, Pensfold and Goodfellow [2021] UKUT 0068 (TCC).
The appeals each concerned the sale of a house together with an area of land. The issue in each case was whether all the land sold together with the house formed “part of the garden or grounds” of the house and so attracted the residential rates of SDLT (s116(1)(b) or whether the land could be treated as non-residential for SDLT and therefore attract the much lower rates.
The taxpayers argued, relying in part on pre-2019 HMRC guidance, that land could only be part of “the garden or grounds of” the house if the land was “needed for the reasonable enjoyment of the house having regard to the size and nature of the house”.
The appeals
The appeal by Pensfold related to a property known as Pensfold Farm, Bucks Green, Surrey and comprised a farmhouse and 27 acres of land.
The appeal by Dr and Mrs Goodfellow related to Heathermoor House, Hale Purlieu, Fordingbridge, Hampshire. The property comprised a house and 4.5 acres of land, which was made up of gardens, a swimming pool, garaging, a stable yard and paddocks.
The appeal by Mr and Mrs Hyman related to a property known as “The Farmhouse” which comprised a house and 3.5 acres of land. The house was situated within a rectangular cultivated garden. Outside this garden was a large barn in a bad state of repair. There was a further garden referred to as a “secondary garden”. Most of the rest of the property was a meadow. On one side of the property was a bridleway which was separated from the garden and the meadow by hedges.
The verdict
The Upper Tribunal dismissed the taxpayers’ appeals holding that HMRC’s pre-2019 guidance was simply wrong and that section 116(1)(b) FA 2003 contained no wording which imposed, or even hinted at, a requirement that land can only be a garden or grounds of a dwelling if the land is needed for the reasonable enjoyment of the dwelling.
Following this decision, anyone that has claimed the non-residential rates of SDLT on the purchase of a property due to the size of the surrounding grounds should seek independent legal advice.
If you are seeking Tax law advice or have any questions regarding the topic discussed above, please don’t hesitate to contact Sally Hutchings on 020 8971 1048 or [email protected]