Upper Tribunal Tax and Chancery Chamber

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

Fecha: 22-Abr-2024

Introduction

Introduction

This appeal concerns Stamp Duty Land Tax (‘SDLT’). On 11 December 2020, the Respondents (‘Mr and Mrs Suterwalla’) purchased a property outside Henley on Thames. The property was a seven bedroom family house with indoor swimming pool, gardens which included a pavilion and a tennis court, and a paddock (together, ‘the Property’). Mr and Mrs Suterwalla filed an SDLT return on 14 December 2020 which declared that the property they had acquired was a residential and non-residential mixed-use property. The consequence of that declaration was that SDLT was chargeable on the transaction at a lower rate than if the Property had been purely residential. The Appellants (‘HMRC’) opened an enquiry into the return on 19 August 2021 and, after an exchange of correspondence, issued a closure notice to Mr and Mrs Suterwalla under paragraph 23 of Schedule 10 to the Finance Act 2003 (‘FA 2003’) on 8 November 2021. The effect of the closure notice was to increase the SDLT due in respect of the acquisition of the Property from £169,500 to £330,750 on the ground that the Property was not mixed-use but entirely residential.

After further correspondence and a review, which upheld HMRC’s decision, Mr and Mrs Suterwalla appealed to the First-tier Tribunal (Tax Chamber) (‘FTT’) on 8 February 2022. The only issue at the hearing of the appeal in May 2023 was whether the Property acquired by Mr and Mrs Suterwalla constituted land consisting entirely of residential property or whether it also included land that was non-residential. Mr and Mrs Suterwalla contended that the paddock, in respect of which they had granted a grazing lease on the day of completion of the purchase, was a non-residential part of the Property. In a decision released on 23 May 2023 with neutral citation [2023] UKFTT 450 (TC) (‘the Decision’), the FTT allowed Mr and Mrs Suterwalla’s appeal.

With the permission of the FTT, HMRC now appeal to the Upper Tribunal (‘UT’) on three grounds, namely that the FTT erred:

(1)

in [57] of the Decision, when it declined to apply the UT’s decision in Ladson Preston Ltd v HMRC [2022] UKUT 301 (TCC) (‘Ladson Preston’) in determining whether the relevant land consisted entirely of residential property;

(2)

in [58] of the Decision, in treating the grazing lease as relevant to the question whether the land transaction was for the acquisition of land consisting entirely of residential property; and

(3)

in any event, the FTT erred in [59] and [60] of the Decision, in concluding that Mr and Mrs Suterwalla had established that the relevant land did not consist entirely of residential property which was not a finding open to it on the facts.

At the hearing before us, HMRC were represented by Ms Marika Lemos with Mr Colm Kelly. They had not appeared before the FTT. As he had done in the FTT below, Mr Patrick Cannon acted for Mr and Mrs Suterwalla. We are grateful to counsel for their submissions both written and oral on behalf of the parties. We were very much assisted by the submissions but, although we considered all of them, we have not found it necessary, for reasons which will become apparent, to refer to each and every argument advanced, all of the authorities cited or all of the evidence before us in reaching our decision.

We set out the FTT’s findings of fact at [19] below and the reasons given for its decision at [20] – [26] before discussing whether they entitled the FTT to find that that the paddock was not part of the grounds of the house at [29] to [44] below but, before we do so, it is convenient to set out the relevant legislation and some case law on the meaning of grounds for the purposes of SDLT.