Discussion of a case of the First Tier Tribunal in which the property tax refund (SDLT) is sought; Hyman against HMRC (2019).
In October 2015, Mr. and Mrs. Hyman acquired a £ 1,515,000 property called "The Farmhouse", which is located only in residential areas. The property was accompanied by 3.5 hectares of land and a barn. At the time of purchase, they filed a SDLT statement with a stamp duty of £ 95,550, which was correct if the property was fully treated as a residential property.
The estate agent described the property as "a great country retreat with a historic barn over 4 acres ……… finding a beautiful country house like this one in such an attractive yet comfortable environment is rare. Surrounded by its own breathtaking gardens stretching over 3.5 hectares … ".
The representative of Mr. and Mrs. Hyman wrote to HMRC in 2017 requesting repayment of overpaid SDLT of £ 34,950. The agent argued that the property should have been classified as mixed rather than residential since the property contained non-residential building elements.
Mr. Hyman used the barn to store larger equipment;
Tractor, mower, strimmer and various power tools and maintained these
He described garden and meadow as "for agriculture". The
The previous owner had stored similar items in the barn.
In the meadow, the family dog was run and kept some chickens to produce eggs for their own use. Mr Hyman claimed that this was an agricultural activity. A public riding trail was part of the property and was used by 10-50 people per day either for cycling, jogging or horseback riding.
Particular attention was paid to the importance of "home ownership" under Section 116 of the Finance Act 2003:
(1) In this Part, "home ownership" means: (a) a building used or suitable as a dwelling or which is being constructed or adapted for such use, or (b) a property which is part of or a building Part of which constitutes the garden or land of a building referred to in point (a) (including all buildings or structures on such land). Or (c) a participation in or a right to any land that exists for the benefit of a building as referred to in paragraph (a) or land in paragraph (b).
Mr. and Mrs. Hyman argued that the meadow, bridle path and barn
are not "interests in or rights to land that exist in favor of a
Housing "and therefore do not fall under the definition of" living "
Property "or" garden or land ". In addition, the barn was not for residential purposes and
would require a building permit to be converted into a residential building.
The HMRC replied that "reasons" are the land
Around the house, which are available as an amenity to the apartment and
Use (non-use) is not relevant. Although the barn is not for residential purposes
still falls under 116 (1) (b) "as a building or structure on such a land".
The discussion centered around dictionary definitions of "garden" and "terrain". It has been found that, in general, any land surrounding a residence under the same ownership should be treated as a residence, unless it is used for a different purpose. Land used for other purposes at the time of disposal, such as agricultural land, industrial forest, built-up land or land used for a trade, should not be considered part of the garden or land.
The following land should not be excluded from gardens or gardens
- Paddocks or orchards where no significant business use exists.
- Land that was traditionally part of the garden but was not used at the time of sale is overgrown and unused.
- Land on which a building is located, unless this building is used or leased to a business.
- Land purchased at a time other than the residence and used as part of the garden and property at the time of disposal.
The judge came to the conclusion that it is not a mixed-use property, but only a residential building. The paid SDLT was due and therefore no refund is granted.
As expected, the decision was made, and it was clear from the beginning that the land and barn were for personal use only. A few chickens would never satisfy the agricultural activity. The current and past use of the land is the key to building a mixed use.
Another case of property tax that highlights that
Importance of real estate descriptions for real estate agents, I believe all brokers should be careful
Consider the tax implications before setting the details. I did one
similar comment to PN
Bewley Ltd v. HMRC Case.
Please note at the time of writing,
The case is still within the appeal period, and Mr. and Mrs. Hyman can appeal
against this decision.
If you want to read the full case, find it Here
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