The commonly held view when purchasing a residential house with gardens is that the residential rate of Stamp Duty Land Tax (“SDLT”) applies. Generally, that view is indeed correct but there are some exceptions. In those exceptions, despite purchasing a residential property, the non-residential rate of SDLT (commonly known as commercial or mixed-use rate) applies.
This was recently clarified and confirmed by the First-Tier Tribunal, Tax Chamber on 23 May 2023 in their judgment on the case brought by Mr Taher and Mrs Zahra Suterwalla (“Mr & Mrs S”) against the HM Revenue and Customs (“HMRC”).
The Background
Mr & Mrs S purchased Woodlands House, Harpsden Woods, Harpsden, Henley on Thames RG9 4AE (the “Property”) on 11 December 2020 for £3.6m. The marketing brochure by joint agents Knight Frank and Savills included the following description of the Property:
• Impressive 7 bedroom family house
• Indoor swimming pool
• Tennis court
• Pavilion
• Paddock
• In sought after location with far reaching views set in 5.15 acres.
Mr & Mrs S’s self-assessed SDLT Return submitted to HMRC by their solicitor stated the Property as residential and non-residential (mixed use). This resulted in SDLT payable of £169,500.
HMRC launched an enquiry into Mr & Mrs S’s self-assessed SDLT Return on 19 August 2021 - almost a year after the SDLT Return was submitted. On 8 November 2021, HMRC concluded that the Property was residential and there was no non-residential element. It therefore calculated the SDLT payable by Mr and Mrs S on the purchase of the property as £330,750, an increase of £161,250.
