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30 November 2023

Another win for HMRC on the topic of "uninhabitable dwellings".

An appeal was bought in 2020 by Henderson Acquisitions Limited (the Appellant) against a HMRC decision refusing a claim for the refund of stamp duty land tax (SDLT) made by the Appellant in the sum of £12,350 following the acquisition of a property in Letchworth in 2016.

It was determined that the Property was suitable for use as a dwelling and the SDLT originally paid by the Appellant at the time of purchase was the correct sum, such that no refund was due.

The law

Finance Act 2003 (FA03) imposes a charge to SDLT on the acquisition of chargeable interests in land in England and Northern Ireland, the amount is determined by reference to three factors:

(1)          whether the land interest acquired is, on the date of completion, residential or non-residential;

(2)          if the land interest acquired is residential, whether the purchaser is a company or, if a private individual, whether it is their main residence or a second home; and

(3)          in each case the consideration paid.

As the Appellant is a company, the relevant definition of residential property is provided by paragraph 18(2) to Schedule 4ZA FA03: “a building or part of a building … a) … used or suitable for use as a single dwelling”. 

The Appellant’s submission

The key issue to be determined in this case is whether the property was suitable for use as a dwelling on 26 August 2016.

The Appellant’s case relied exclusively on the judgment in Bewley, and that the taxpayer had purchased a derelict bungalow which has not been in use as a dwelling at the time of the transaction and had lain empty for several years.  There were no floorboards, pipework or radiators, asbestos was extensively present which precluded renovation and required that the property be demolished. 

The tribunal determined that taking into account these facts: “we have no hesitation in saying that in this case the bungalow was not suitable for use as a dwelling.”

In advance of the hearing, the judgement of Fiander and Bower v HMRC [2021] UKUT 156 (TCC) (Fiander) and the FTT judgment in Mudan v HMRC [2023] UKFTT 317 (TC) (Mudan) were circulated. 

These cases confirm that the need to carry out renovation works such as replacement of central heating is not sufficient to render a building unsuitable for use as a dwelling.  Based upon these judgements, the Appellant accepted that the only works which were relevant in determining suitability for use as a dwelling were those concerning the replacement of the joists and the collapsed ceiling which, in his view, were structural and therefore similar to Bewley.

HMRC’s submission

HMRC stated that in order to determine a building unsuitable for use as a dwelling it must be derelict and require demolition.  If it can be renovated without demolition, it remains suitable for use as a dwelling. 

Further to this. the Appellant’s property had been in use as a dwelling by the former owner in its current state. HMRC considered that whilst the property needed some structural work, such as the replacement of the joists, it was still suitable as use as a dwelling, relying on Fiander in support of this distinction.


The tribunal determined that the Property was suitable for use as a dwelling and the appeal was dismissed.

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