TC09658 - [2025] UKFTT 01210 (TC)

The legislation governing SDLT is set out in Part 4 of the FA 2003. Unless otherwise stated, references to sections and schedules in this decision are to sections and schedules of the FA 2003 as it was in force on the EDT.

Section 42 makes SDLT chargeable on land transactions and section 55 sets out the applicable rates of SDLT payable by reference to the amount of consideration paid and whether the relevant land consists of entirely residential property or includes non-residential property. SDLT is chargeable on the EDT of a land transaction which in this case means the date of completion (section 119).

On the EDT the applicable rates of SDLT payable on a residential land transaction were as follows:

Section 58D introduces Schedule 6B which provides for MDR, the effect of which, as set out in paragraph 4 of Schedule 6B, is to lower the effective rate of SDLT by dividing the chargeable consideration by the number of dwellings which are the subject matter of a land transaction, applying the applicable rates in section 55 to that amount to establish the SDLT charge in relation to each dwelling and then multiplying that amount by the number of dwellings to calculate the total SDLT chargeable on the residential land transaction.

Paragraph 2 of Schedule 6B identifies the transactions to which MDR applies which includes a land transaction if its main subject-matter consists of an interest in at least two dwellings (paragraph 2(1)(a) and 2(2)(a)). The reference in Schedule 6B to an interest in a dwelling is to any chargeable interest in or over a dwelling (paragraph 2(5)).

Paragraph 7 of Schedule 6B contains rules for determining what counts as a dwelling for the purposes of Schedule 6B, the relevant part of which for the purpose of this appeal provides at sub-paragraph (2) that:

“A building or part of a building counts as a dwelling if-

(a)

it is used or suitable for use as a single dwelling, or

(b)

it is in the process of being constructed or adapted for such use.”

The key issue for us to determine is therefore whether the Property was made up of three dwellings at the EDT, as contended by Mr Town, which in turn will require us to determine whether the Property comprised of three buildings or parts of a building that are suitable for use as a single dwelling.

What counts as being suitable for use as a single dwelling is not defined in the legislation but the leading authority on what constitutes a single dwelling for the purpose of SDLT is the decision of the Upper Tribunal in the case of Fiander and Bower v HMRC [2021 UKUT 0156 (Fiander) which binds us. At paragraphs [47] – [48] of that decision the Upper Tribunal stated as follows:

“47.

The HMRC internal manuals on SDLT contain various statements relating to the meaning of “dwelling” and “suitable for use as a single dwelling”, but these merely record HMRC’s views and do not inform the proper construction of the statute.

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. That conclusion follows in our view from the natural meaning of the word “suitable”, but also finds contextual support in two respects. First, paragraph 7(2)(b) provides that a dwelling is also a single dwelling if “it is in the process of being constructed or adapted” for use as single dwelling. So, the draftsman has contemplated a situation where a property requires change, and has extended the definition (only) to a situation where the process of such construction or adaption has already begun. This strongly implies that a property is not suitable for use within paragraph 7(2)(a) if it merely has the capacity or potential with adaptations to achieve that status. Second, SDLT being a tax on chargeable transactions, the status of a property must be ascertained at the effective date of the transaction, defined in most cases (by section 119 FA 2003) as completion. So, 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. A caveat to the preceding analysis is that a property may be in a state of disrepair and nevertheless be suitable for use as either a dwelling or a single dwelling if it requires some repair or renovation; that is a question of degree for assessment by the FTT.

(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.”

There have been a number of FTT decision on the application of the Fiander principles set out above. However as stated in the FTT decision in Winfield v HMRC [2024] UKFTT 734 (TC) at [16]:

“Limited help can be given by previous decisions which turn on their own facts. So, for example HMRC rely on Dower v HMRC [2022] UKFTT 170 (“Dower”) as authority that privacy is something which carries considerable weight. But in Dower it was also true that there was no kitchen. And this should colour other elements of the judgment”

Further in Benjamin Packman (1) and Miranda Wood (2) v HMRC [2024] UKFTT 954 (TC), the FTT agreed with the above view in Dower commenting as follows:

“[22] We were referred to a number of first instance decisions on both sides, however for the reasons given in Winfield we do not derive any real assistance from them as their fact patterns are different, and none establish any new principles.

[23] Both parties’ attempts to piece together, jigsaw like, individual findings from individual cases is not in the end helpful where we must conduct a multi-factorial exercise on the facts as a whole as we find them to be in this case.”