In our Spring 2019 issue of Talking Tax we reported on an apparent change in HMRC’s approach for mixed-use stamp duty land tax (SDLT) claims.
As a recap, purchases of residential properties with extensive accompanying land had previously been accepted as mixed-use properties and hence subject to lower SDLT rates. HMRC had, however, started to challenge this position and only accept such claims where it could be demonstrated that a commercial return had been received for use of part of the grounds.
A recent case, Mr D and Mrs S Hyman v HMRC, found in favour of HMRC on this very point. The Hymans had purchased a property with over 3.5 acres of land, including a barn, a meadow and a public bridleway. The couple originally payed SDLT on the basis that the property was residential but subsequently made a repayment claim, assessing that the property purchase was of mixed-use, which HMRC rejected.
The First Tier Tribunal found that, as the SDLT legislation did not define ‘garden or grounds’, its ordinary meaning should be used. It was determined that a wide definition should apply, to include any land attached to or surrounding a house which is available for the owners to use as they wish. The tribunal also commented that if part of the land had been used for a separate commercial purpose this would not constitute grounds and hence a mixed-use claim could be made.
HMRC has also recently published guidance within their SDLT manuals to clarify the meaning of ‘garden or grounds’ in line with their recent win. For capital gains tax purposes, there is a concept of ‘reasonable enjoyment’ but HMRC advise that this does not apply to SDLT.