Stamp Duty appeal threatens HMRC’s unbeaten record

A landmark Tribunal ruling against His Majesty’s Revenue and Customs means that homes with adjoining grazing and woodland could attract commercial rates of SDLT tax instead of residential rates.

Sean Randall, a partner at leading tax and advisory firm Blick Rothenberg, who is an SDLT expert said: “For years taxpayers have argued that where they have a property in the country that has grazing and woodland that any SDLT should be levied on a commercial basis instead of on a residential basis.”

He added: “This has led to litigation and HMRC had, until this case, an unblemished record in challenging “mixed-use” appeals. This is the first case where the evidence of separate non-residential use has been sufficient. It is also a good example of the need to consider all the circumstances and to be careful of relying on HMRC’s guidance.”

He added: “It is uncertain whether HMRC will appeal the decision. If they do not, it will encourage others to pay stamp duty at the lower rates in similar cases. If they do appeal the decision and are unsuccessful, the decision will be binding on others – this decision, so far, is only persuasive authority. Consequently, there is a lot at stake for HMRC, at least until the law is changed and the “mixed-use rule” is either replaced with an apportionment rule or strengthened by requiring the non-residential element to exceed a minimum threshold. Surely the “mixed-use rule” is on life support given the extent to which it produces unfair results and is being abused. The rules will almost certainly be tightened next year.”