SDLT: annexe not a separate dwelling

In Edward and Clare Partridge v HMRC [2021] TC7991, the First Tier Tribunal (FTT) denied SDLT Multiple Dwellings Relief on the purchase of a house with an annexe. It was a single dwelling.

• Mr and Mrs Partridge purchased a six-bedroom detached property with an annexe in April 2017 for £915,000. 
• The property was purchased by the appellants to accommodate their three children and to allow for the elderly parents of Mrs Partridge to move in after some alterations.
• A Stamp Duty Land Tax (SDLT) Return was filed and later amended to include a claim for Multiple Dwellings Relief (MDR) on the annexe.
• The annexe had:
  • A separate entrance door, kitchen and garden.
  • Internal doors allowed it to be shut off from the main house.
  • A bathroom was accessed through the main hallway of the main house.
  • No designated bedroom.
• HMRC raised an enquiry into the amended return and subsequently issued and upheld Closure notices after a statutory review.
• Mr and Mrs Partridge appealed to the FTT on the grounds that the annexe was a separate dwelling so MDR should be available.

The FTT found that:

• The burden of proof was on the appellants to show the annexe was used or suitable for use as an independent dwelling.
• A dwelling should accommodate all of the basic domestic living needs of the occupant, that is to sleep, eat and attend to personal hygiene needs with a reasonable degree of security and privacy. 
• The suitability of the annexe as a dwelling was to be 'adjudged from the perspective of a reasonable person observing the physical attributes of the property at the time of the transaction'.
• The living and bathing facilities were not separate from the main house and this did not support the annexe as a separate dwelling.
• While specific circumstances could exist that the arrangements could provide sufficient privacy or security, such as elderly parents moving in, this points to the conclusion that the annexe was not ordinarily suitable for use as a dwelling.

To the eyes of an objective observer, the main house and annexe would be viewed as a single dwelling and not as two dwellings when the purchase transaction completed.

The appeal was dismissed.

Useful guides on this topic

SDLT: MDR & Annexes Tool
Stamp Duty Land Tax (SDLT) Tool, if you are buying two or more properties in a single transaction use this tool to see if you meet 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 is Multiple Dwellings Relief (MDR)? When does it apply and how is it claimed?

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review?

Closure notices
When does HMRC issue a closure notice? Can a taxpayer demand one? Are there appeal rights? 

SDLT: Linked Transactions
What are Linked Transactions? When do Linked Transaction rules apply for SDLT? How do I calculate SDLT on a linked transaction?

External Links

Edward and Clare Partridge v HMRC [2021] TC7991