In this month’s briefing, Suzanne O’Hara summarises two of the most notable recent First Tier Tribunal cases concerning SDLT and provides an update on the latest HMRC update to their SDLT guidance.
Goodfellow (TC07507)
The decision of the First Tier Tribunal in the case of
Goodfellow was released on 16
th December 2019 and follows on from the Hyman case, which was dealt with in the
November SDLT Briefing. Interestingly, the same representatives appeared on both sides and the judge adopted much of the reasoning of Hyman.
The case involved a refund application made by the taxpayer who asserted that too much SDLT was paid in respect of the land transaction. The SDLT return was submitted on the basis that the land transaction was entirely residential, and a subsequent overpayment claim was made, some 18 months later, asserting that the transaction actually did not consist of entirely residential property because:
- the space above the garage was used as an office for the taxpayer’s business; and
- the stable yard and paddocks were used by a third party for grazing horses (rent £1 per month).
The judge held that despite the actual business use of the room, the building remained 'suitable for use as a dwelling'. Nor was the use of the paddocks enough to take them out of the 'garden and grounds' of the house. The judge accepted HMRC’s submissions and noted, ‘
The arguments advanced by Mr Callard (instructing tax adviser for the taxpayer
) seemed to us artificial, strained and contrary to common sense.’
HMRC seem to be looking at this issue very closely and further litigation is expected in the upcoming months.
Secure Service Limited (TC07555)
The decision of the First Tier Tribunal in the case of
Secure Service Ltd was released on 31 January 2020. The case considered whether the Tribunal has jurisdiction to hear an appeal against HMRC’s refusal to accept a late claim for Multiple Dwellings Relief (MDR).
The case involved a property development company that acquired a single title property with 3 separate dwellings. The original SDLT return claimed relief from the 15% higher rate (property development exemption) but did not claim MDR. A claim for MDR was subsequently made outside the 12-month amendment window.
The case confirmed a number of points:
- A claim for multiple dwellings relief has to be made within a 12-month time limit; HMRC cannot allow a claim for the relief outside of that period.
- A claim for MDR cannot be treated as a claim for overpayment of SDLT (for which the time limit is 4 years).
Interestingly and on a wider point, the taxpayer argued that it should have been clear to HMRC before the expiry of the relevant time limit that relief was available, and that they should therefore have advised the taxpayer to make a claim. Not surprisingly this argument was rejected.
There is no obligation in law for HMRC to advise a taxpayer of claims which could be to their advantage, and a tribunal has no power to consider whether or not HMRC should nonetheless have raised the issue. It is entirely a matter for the taxpayer as to whether or not to make a claim and, in some cases, specialist advice should therefore be sought.
Key updates to HMRC manuals
- SDLTM09080 was added to the Manual on 15 January 2020, regarding how to apply for clearances. Although it refers to ’business customers‘ in fact the procedure applies to all taxpayers.
SDLT is becoming increasingly complex. If in doubt, seek professional advice.