SDLT: Right of way did not change nature of residential property

In James and Charlotte Averdieck v HMRC [2022] TC 8623, the First Tier Tribunal (FTT)  ruled that the maintenance obligations a public right of way put on the landowners were insufficient to render the purchase mixed use and subject to lower non-residential rates of Stamp Duty Land Tax (SDLT).

• The couple jointly purchased a substantial residential property and grounds for £3m in August 2020.
• A SDLT Return was filed in September 2020 stating the acquisition was of Residential Property and £258k of SDLT was paid.
• In December 2020 an amendment was made reclassifying the property as mixed use and therefore subject to non-residential Rates of SDLT.
• The amendment was on the basis that the property contained a public right of way which required the appellants to meet certain statutory maintenance obligations which was claimed to make the property mixed use.
• SDLT of £119k was repaid by HMRC.
• In August 2021 HMRC opened an enquiry and subsequently issued closure notices on the basis that the transaction was not mixed use as it was solely residential property.
• Following an unsuccessful Statutory Review, the taxpayer Appealed to the FTT.

The FTT found that:

• The right of way was used by the appellants to access the property, that they have statutory obligations of maintenance did not change the fact it was used as part of the residential property.
• The existence of obligations in respect of land does not exclude that land from being residential property.
• The maintenance obligations did not impose a sufficient burden to cause the land to cease being residential property.

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: 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)?

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? 

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?

External links

James and Charlotte Averdieck v HMRC [2022] TC 8623