One of the rewards of Jamie Gibson’s glittering rugby career has been his purchase of a six-bedroomed house in a couple of acres of land in the Warwickshire countryside.
The main question before the First-tier Tribunal (‘FTT’) in Gibson v HMRC [2023] UKFTT 648 (TC) was – did all of the land purchased form part of the garden or grounds of the house, or was some part non-residential? Some £80,000 of Stamp Duty Land Tax (‘SDLT’) was at stake.
There were two strings to Mr Gibson’s argument. The first was that there was above the (detached) garage a studio room from which he ran one business and intended to run another. The second was that the property purchased included not only the house itself with its half-acre garden but also a two-acre paddock with separate title. Mr Gibson argued that either or both of these rendered the purchase partly non-residential.
As regards the garage, the FTT considered that the use made of the studio room by Mr Gibson was irrelevant. The garage, which was ‘virtually adjacent to the dwelling-house’ was plainly a building or structure in the grounds of the dwelling-house and as such treated as residential property.
The FTT spent a little more time considering the paddock. It was separated from the garden by a ha-ha; there was an agricultural right of way between the garden and the paddock; the paddock had historically been let for grazing and Mr Gibson said that he ‘wanted to continue the commercial grazing and further develop the agricultural use’.
Nonetheless, the FTT held that the paddock, too, formed part of the grounds. It ‘did not consider that the Paddock had a self-standing function, namely a commercial purpose being the provision of grazing or farming or horticulture and there was no evidence it was exploited on a regular basis’. In fact, it was grazed in Spring and Summer only (when it ‘would have provided reduced maintenance or mowing of the Paddock for the benefit of the Property’) with no monetary consideration but ‘an understanding that joints of lamb would be given to JG’ (interesting aside – should Mr Gibson have declared the value for tax purposes? Discuss.) Although the FTT didn’t quite put it this way, there’s a qualitative difference between informally allowing your neighbour’s sheep (or pets, or children, come to that) to make use of your grounds for part of the year and a commercial arrangement to grant an agricultural tenant exclusive use of your land.
The FTT’s approach follows the line taken in most earlier similar cases and tends to reinforce our view that Mr and Mrs Suterwalla’s success (on which we commented here) was something of a one-off.
We’re tempted to say ‘nice try, but no conversion’.
An interesting subsidiary point on the same case relates to multiple dwellings relief (‘MDR’). Mr Gibson’s purchase included not only the main house (and the paddock) but also a self-contained barn conversion with two bedrooms, two bathrooms and a kitchen as well as dining and leisure space. The barn and the house were separately metered for electricity and water, separately assessed for council tax and each had its own postal address. A classic case for claiming MDR, you might have thought.
Unfortunately, Mr Gibson had not raised the possibility of MDR until nearly a year after the window for amending the SDLT return had closed. However sound his claim might have been, he was simply out of time to make it and the FTT inevitably found against him on the point. The lesson here is that where alternative claims may be possible (in this case MDR and non-residential rates) it’s important to make them all.
For more information on SDLT, MDR and other property taxes and reliefs that may apply to your situation, please get in touch with your usual BKL contact or use our enquiry form.
