Automated Summary
Key Facts
Fish Homes Ltd purchased a flat in 2017 as part of their property rental business. The flat had Aluminium Composite Material (ACM) cladding, similar to Grenfell Tower, which posed fire safety risks. HMRC argued the relief from the 15% high-value residential transaction charge was withdrawn due to Miss Fish (a nonqualifying individual) occupying the flat within three years of purchase. Fish Homes claimed the flat was not a dwelling due to cladding defects, but the tribunal found it was a dwelling. Remedial cladding work was completed in 2019, after which formal tenants moved in.
Tax Type
Stamp Duty Land Tax (SDLT) on high-value residential property
Issues
- Whether relief under paragraph 5 (for high-value residential transactions acquired for a qualifying property rental business) was withdrawn by paragraph 5G due to Miss Fish (a nonqualifying individual) occupying the flat within three years of purchase. This included assessing HMRC's authority to amend the SDLT return and the procedural requirements under section 81(1A) FA 2003 for further returns.
- At the time of completion, whether the flat with ACM cladding (non-compliant with building regulations) was a 'dwelling' for the purposes of Schedule 4A (high-value residential transaction charge) and Schedule 4ZA (residential transaction charge). This included evaluating if the cladding's fire risk rendered the flat unsuitable for habitation, referencing cases like Rendleshaw Estates v Barr Ltd and PN Bewley Ltd v HMRC.
Tax Years
2017
Holdings
- The tribunal determined that the flat, despite having defective cladding, was a dwelling at the time of purchase, making it a residential transaction subject to the 15% SDLT rate unless relief applied.
- The tribunal concluded that relief under paragraph 5G was withdrawn because a nonqualifying individual occupied the flat within three years, requiring a further SDLT return and resulting in the higher tax rate.
Remedies
- The tribunal allows the appeal against the amendments to the SDLT return, holding that the duty payable on that return was the amount shown in it.
- The tribunal dismisses what it treats as the appeal against the determination, resulting in the extra tax payable as reflected in HMRC's amendments to the original SDLT return.
Tax Issue Category
Other
Legal Principles
The tribunal applied the purposive approach to interpret the definition of 'dwelling' under Schedule 4A of the Finance Act 2003, emphasizing the legislative intent to expand the meaning of 'dwelling' beyond ordinary usage. It concluded that the flat was a dwelling despite defective cladding, as the risk of fire did not render it unsuitable for habitation. The tribunal also addressed the withdrawal of relief under paragraph 5G, treating it as a statutory requirement separate from the initial transaction.
Precedent Name
- Uratemp Ventures Ltd v Collins
- PN Bewley Ltd v HMRC
- Rendleshaw Estates v Barr Ltd
- Carson Contractors Ltd v HMRC
Cited Statute
- Finance Act 2003
- Landlord and Tenant Act 1985
- Defective Premises Act 1972
- Human Rights Act 1998
- Regulatory Reform (Fire Safety) Order 2005
- Housing Act 2004
Judge Name
Charles Hellier
Passage Text
- Unless a party writes the tribunal within 28 days of the date this decision is released arguing that this course of action is unjust or otherwise wrong I shall issue a second decision on that basis.
- I find that the risk imposed by the cladding was not such as to prevent the flat from being a dwelling or being suitable for use as a dwelling.