Buyers of a Georgian mansion with large grounds must pay a hefty £603,750 stamp duty after it was ruled as a residential purchase.
Simon and Joanne Holding challenged the HMRC in the First Tier Tribunal (FTT) over a stamp duty land tax (SDLT) charge, insisting that part of their property’s grounds should be taxed as non-residential.
They had bought a £4.6 million five-bedroom Georgian home, which included a cottage, staff quarters, and extensive facilities for horses, spread out over 40 acres. Included in the property were fenced horse paddocks and an indoor riding arena with lights.
The Holdings claimed that about 24 acres of the land, which were fields, didn’t count as the house’s grounds according to the Finance Act 2003, section 116(1)(b).
Because this was an additional home for the Holdings at the time of purchase in August 2018, they were subject to a higher SDLT rate.
After reviewing their SDLT return, HMRC sent out a notice on 24 January 2020 demanding £603,750 in taxes.
The Holdings, however, believed they were only liable for £219,500 of the transaction.
HMRC maintained that since the fields were part of the residence’s grounds, the property was entirely residential, and thus the increased tax rate applied.
Loretta McLaughlin, an in-house litigator for HMRC, mentioned the property including the fields was under one title, and that the transfer of this title to the Holdings indicated that the fields were part of the home’s grounds.
Simon Holding argued at the tribunal that the surrounding land far exceeded what he deemed reasonable for supporting the house and thus wasn’t part of its grounds.
The Holdings’ lawyer, Patrick Cannon of Excello Law, contended that the fields were unrelated to the house. He explained that the legislation specifies land must be supportive of the dwelling’s use, and these fields did not connect or contribute to the house in that sense.
Nevertheless, the tribunal observed that the vendors had used the fields for winter grazing for horses, analogous to the Holdings’ own use of certain fields for animals. It was noted that even though the fields were separately fenced, it didn’t restrict their inclusion as part of the property.
Tribunal Judge Jonathan Cannan said there wasn’t plentiful evidence on the vendors’ use of the fields aside from an agricultural arrangement. He emphasized the significance of potential usage, observing that the owners could use the fields for personal purposes such as keeping animals. These opportunities inherently benefitted the residence.
The judge acknowledged that land must offer some sort of amenity to the residence, but he didn’t agree with the assertion that these fields offered no such benefits. Subsequently, the Holdings’ appeal was rejected.
Homebuyers ordered to pay £603,000 in stamp duty after losing HMRC tax battle
