UT/2023/000083 - [2024] UKUT 00188 (TCC)

The FTT set out its reasons for allowing Mr and Mrs Suterwalla’s appeal at [57] – [60]. The FTT’s primary reason for allowing the appeal is in [57] of the Decision:

The FTT’s reasoning in [57] is very compressed. The first sentence is a rejection of HMRC’s argument, recorded at [52], that the FTT should apply the approach taken by the UT in Ladson Preston at [62] and ignore the grazing lease as it was not in place at the time of completion. HMRC submitted that Mr and Mrs Suterwalla could not grant the grazing lease until after completion and therefore, at completion, the Property was wholly residential. We discuss Ladson Preston at [47] - [49] below.

The second sentence of [57] of the Decision is an acceptance of Mr Cannon’s submission in [44] that the FTT should not follow the decision of another FTT in Brandbros Ltd v HMRC [2021] UKFTT 157 (TC) (‘Brandbros’). In Brandbros, which pre-dated Ladson Preston, the FTT decided that the grant of a commercial lease over a garage on the same date as completion of the purchase was a separate transaction and did not affect the treatment of the prior purchase of the dwelling earlier on the same day even though section 119 refers to the date of completion and not the time of completion as the effective date of a land transaction for SDLT purposes. Mr Cannon had submitted that the Property should be regarded as mixed-use because section 119 refers to the effective date not the time and the Property became subject to the grazing lease on the date of completion (11 December 2020) albeit after the completion had occurred. In [45], the FTT records that Mr Cannon contended that HMRC were relying on a ‘scintilla temporis’ between the completion of the purchase of the Property and the grant of the grazing lease. Mr Cannon relied on statements by Lord Oliver in Abbey National v Cann [1990] 1 All ER 1085 and Lord Hoffman in Ingram v HMRC [2001] 1 AC 303 to the effect that ‘scintilla temporis’ is a legal artifice and not based on reality.

In [57], the FTT gave no reasons for disagreeing with decision of the FTT in Brandbros, a case in which Mr Cannon had appeared for the taxpayer and deployed the same argument based on scintilla temporis, but where the panel reached the opposite conclusion to the FTT in this case. Of course, the decision of one FTT is strictly not binding on another FTT as a matter of precedent, but the principle of judicial comity, or horizontal stare decisis, requires that a FTT should follow the decision of a previous tribunal of co-ordinate jurisdiction unless ‘convinced’ or ‘satisfied’ (there is no practical difference between the two) that the earlier decision was wrong (see Gilchrist v HMRC [2014] UKUT 169 (TCC) at [91] to [94]). There are good reasons for this practice: it promotes consistency in judicial decisions and predictability of outcomes thereby avoiding re-litigation of identical legal issues, and it builds public confidence in the appeals process by ensuring that similar cases are treated similarly over time. If a later FTT considers that a previous decision of the FTT on materially identical facts and/or law was wrong, then it should set out why. It need not do so at great length but simply stating, as the FTT did in this case, that other decisions not on the same point are preferred leaves the reader in the dark. We consider that, where a FTT decides not to follow the decision of another FTT on the same or a materially similar point, it should explain why it has taken a contrary view.

The third sentence of [57] was the subject of some debate at the hearing. Ms Lemos said that the FTT was saying that, even if it was wrong about everything it said in the first two sentences of [57], there were other reasons why the paddock was not part of the grounds of the house. Mr Cannon submitted that the first sentence of [57] should be read as a self-contained section and when the FTT said in the third sentence “However, if I am wrong on this point ...”, that was only referring to Brandbros and not to the comments about not being obliged to follow Ladson Preston. Mr Cannon contended that, on that interpretation, it was not wrong for the FTT to take the grazing lease into account in considering the pointers in [59].

We do not accept Mr Cannon’s reading of [57] as there seems no justification for applying the last sentence of the paragraph to the second sentence only and not the first. The cases of Ladson Preston in the first sentence and Brandbros in the second both went to the same point in the appeal, namely whether the grant of the grazing lease after completion of the purchase affected the character of the interest acquired or should be ignored. In the last sentence of [57], the FTT was saying that even if it was wrong to take account of the grazing lease in determining whether the paddock was part of the grounds of the house, there were other reasons for allowing the appeal.

The FTT sets out its reasons for reaching its conclusion at [58] – [60] which are as follows: