TC09626 - [2025] UKFTT 01067 (TC)

The Upper Tribunal in Fiander and Brower v HMRC [2021] UKUT 0156 (TCC) conveniently set out the principles to be applied in determining whether MDR applies. Insofar as relevant those principles are:

“48.

We must therefore interpret the phrase giving the language used its normal meaning and taking into account its context. Adopting that approach, we make the following observations as to the meaning of “suitable for use as a single dwelling”:

(1)

The word “suitable” implies that the property must be appropriate or fit for use as a single dwelling. It is not enough if it is capable of being made appropriate or fit for such use by adaptations or alterations…the question of whether the property is suitable for use as a single dwelling falls to be determined by the physical attributes of the property as they exist at the effective date, not as they might or could be...

(2)

The word “dwelling” describes a place suitable for residential accommodation which can provide the occupant with facilities for basic domestic living needs. Those basic needs include the need to sleep and to attend to personal and hygiene needs. The question of the extent to which they necessarily include the need to prepare food should be dealt with in an appeal where that issue is material.

(3)

The word “single” emphasises that the dwelling must comprise a separate self-contained living unit.

(4)

The test is objective. The motives or intentions of particular buyers or occupants of the property are not relevant.

(5)

Suitability for use as a single dwelling is to be assessed by reference to suitability for occupants generally. It is not sufficient if the property would satisfy the test only for a particular type of occupant such as a relative or squatter.

(6)

The test is not “one size fits all”: a development of flats in a city centre may raise different issues to an annex of a country property. What matters is that the occupant’s basic living needs must be capable of being satisfied with a degree of privacy, self-sufficiency and security consistent with the concept of a single dwelling. How that is achieved in terms of bricks and mortar may vary.

(7)

The question of whether or not a property satisfies the above criteria is a multi-factorial assessment, which should take into account all the facts and circumstances. Relevant facts and circumstances will obviously include the physical attributes of and access to the property, but there is no exhaustive list which can be reliably laid out of relevant factors. Ultimately, the assessment must be made by the FTT as the fact-finding tribunal, applying the principles set out above.”

Consideration must be given as to how many dwellings an objective observer would consider there to be and ‘objective observer’ was defined at [51] of this Tribunal’s decision in Fiander:

“51.

We approach “suitability for use” as an objective determination to be made on the basis of the physical attributes of the property at the relevant time. Suitability for a given use is to be adjudged from the perspective of a reasonable person observing the physical attributes of the property at the time of the transaction”.

This summary of the test was endorsed by the Upper Tribunal in Fiander:

“62.

We agree with the FTT’s statement at [51] of its decision that suitability for use as single dwelling is an objective determination to be made on the basis of the physical attributes of the property at the relevant time, namely completion. It therefore follows that the property’s past history - which is the subject-matter of the additional evidence - is of limited relevance to suitability for use as at completion”

We were also taken to a number of decision of this Tribunal, particularly by the Appellants but, as is recognised by the parties and in these decisions (for example Packman v HMRC TC/2023/08890 at [22] and [23]) that whilst illustrative, these decisions are very fact specific and referring to prior decisions of this Tribunal and attempting to derive principles from them is unhelpful. The test is the multifactorial test as laid out in Fiander.