Multiple Dwellings Relief Cases

(Case Law)

Comment: Multiple Dwellings Relief (MDR) ended on June 1, 2024, but claims for purchases made before this date are allowed until April 30, 2025. Understanding key legal cases helps clarify eligibility and application criteria for MDR.

Key Points:

  • MDR aims to provide tax relief for purchasing multiple dwellings.
  • Legal disputes arise from unclear definitions and conditions for MDR.
  • Tribunal cases shape HMRC policies and provide clarity for taxpayers.

Main Principles:

  • MDR requires clear identification of separate dwellings.
  • Properties must meet specific criteria, including suitability for permanent living.
  • Tribunal decisions highlight the importance of property use and physical attributes in determining eligibility for MDR.

Multiple Dwellings Relief (MDR) ceased on June 1, 2024; however, if your property was bought before this date, you have until April 30, 2025, to submit a claim, provided it’s within one year of purchase.

The Ambiguity Surrounding Multiple Dwelling Relief

At its core, Multiple Dwelling Relief aims to provide a tax relief for purchasers of more than one dwelling. However, the interpretation and application of MDR criteria have proven to be anything but straightforward. 

The general confusion stems from several factors: the definition of a ‘dwelling,’ the conditions under which relief can be claimed, and the calculation methodologies. These ambiguities have led to numerous disputes, with taxpayers and HM Revenue & Customs (HMRC) often finding themselves at odds over the rightful application and scope of MDR.

Tribunal Cases as Beacons

The cases reviewed in this section serve as critical waypoints in the ever-evolving landscape of MDR policy. Each case highlights unique facets of the relief, from disputes over what constitutes a dwelling to disagreements on how relief should be calculated when properties are mixed-use or partially qualify. 

By examining these tribunal decisions, we gain insight not only into the specifics of each case but also into the broader trends and challenges in interpreting MDR legislation.

Shaping HMRC Policy

These tribunal cases do more than resolve individual disputes; they play a pivotal role in shaping both internal and external HMRC policies. Internally, they inform HMRC’s guidance, helping refine the criteria and advice given to taxpayers. 

Externally, they influence how practitioners approach MDR claims, providing precedents and clarifying ambiguities. This iterative process, though slow, is vital for ensuring that MDR serves its intended purpose without becoming a loophole for tax avoidance or an undue burden on legitimate transactions.

 

MDR Case: Proper Identification of Dwellings important in SDLT for Multi-Building Real Estate Transactions

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024; however, if your property was bought before this date, you have until April 30, 2025, to submit a claim, provided it’s within one year of purchase.

Landmaster Investment Ltd & Anor v Revenue And Customs (STAMP DUTY LAND TAX – Options and rights of pre-emption) [2023] UKFTT 736 (TC) (03 August 2023). Cite as: [2023] UKFTT 736 (TC)

URL: https://www.bailii.org/uk/cases/UKFTT/TC/2022/TC08476.pdf 

➤ Identifying separate dwellings in real estate transactions is important for applying the correct SDLT, especially for claiming Multiple Dwellings Relief.

Introduction
This case revolves around the correct Stamp Duty Land Tax (SDLT) application for a property acquisition, focusing on identifying dwellings and apportioning purchase consideration for Multiple Dwellings Relief (MDR).

Example scenario where this case law principle is relevant
In real estate transactions involving multiple buildings on a property, determining SDLT can hinge on identifying distinct dwellings and fairly distributing the purchase price among them. For instance, a company buying a property with a main house, annex, and outbuildings for mixed residential and business use must correctly apply MDR by identifying each dwelling and justly apportioning the total purchase consideration.

The legal principles agreed upon
The tribunal agreed that consideration for SDLT must be apportioned on a “just and reasonable” basis among identified dwellings for MDR purposes. It emphasised that apportionment does not necessarily reflect market values but should consider the importance and intended use of each property component.

General summary
The case revolved around Marcus and Marcus Limited’s purchase of a property with multiple buildings, including a main house and annexes, for £875,000. The core issue was how to apply MDR, which depends on identifying dwellings within the property and apportioning the purchase price justly and reasonably among them. The tribunal found that the main house, including a summerhouse but excluding an office used for a nursery business, constituted one dwelling, while the annexes formed additional dwellings. 

The tribunal decided that apportioning the purchase price based on the floor area of each building, giving equal value to each square metre, was a just and reasonable method. This apportionment method led to the conclusion that the main house’s attributed value was below £500,000, allowing MDR to apply to all three dwellings. The tribunal’s decision highlighted the importance of considering the specific use and value of each part of a property in determining SDLT liabilities, ultimately allowing the appeal and indicating a refund was due to the appellant.

MDR Case: Annexes Must Meet Specific Criteria for SDLT Multiple Dwellings Relief Eligibility

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024; however, if your property was bought before this date, you have until April 30, 2025, to submit a claim, provided it’s within one year of purchase.

➤ For an annexe to qualify for SDLT Multiple Dwellings Relief, it must be independently suitable for permanent living, including having necessary facilities and permissions.

ALEX DOWER & SIAN LOUISE DOWER Revenue & Customs (STAMP DUTY LAND TAX – Multiple Dwellings Relief – ‘self-contained’ annexe) [2022] UKFTT 170 (TC) (27 May 2022). Cite as: [2022] UKFTT 170 (TC).

URL: http://www.bailii.org/uk/cases/UKFTT/TC/2022/170.html 

Introduction
The Dower case revolves around an appeal against HMRC’s decision to disallow Multiple Dwellings Relief (MDR) on Stamp Duty Land Tax for a property with a self-contained annexe.

Example scenario where this case law principle is relevant
This case law principle applies when purchasing properties with annexes or additional dwellings, impacting the eligibility for tax reliefs like MDR. For instance, a buyer claiming MDR for a property with an annexe must prove it constitutes a separate dwelling based on its suitability for permanent residence, including having proper kitchen facilities and planning permissions.

The legal principles agreed upon
The tribunal focused on whether the annexe was “suitable for use as a single dwelling” for MDR purposes. Key factors included the annexe’s self-containment, planning permissions restricting its use, and the absence of essential living facilities like a proper kitchen. The appeal was dismissed, reinforcing that for MDR eligibility, an annexe must offer a degree of permanence and independence akin to a separate dwelling.

General summary
The Dower case scrutinises the criteria for classifying parts of a property as separate dwellings for tax relief purposes. The tribunal’s decision hinged on the annexe’s lack of permanent living facilities and planning restrictions, which underscored its unsuitability as a separate dwelling. 

This case sets a precedent on the importance of an annexe’s independence and readiness for permanent residence in determining tax relief eligibility, emphasising the need for clear evidence of self-containment and compliance with planning permissions.

MDR Case: Assessing Tax Implications in Real Estate Transactions with Separate Living Units

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024 

➤ Properties with separate living units, like a house and annex, must meet specific criteria for privacy and independence to qualify for Multiple Dwellings Relief on SDLT.

Doe v Revenue and Customs (STAMP DUTY LAND TAX – transaction involving multiple dwellings) [2021] UKFTT 17 (TC) (25 January 2021). Cite as: [2021] UKFTT 17 (TC).

URL: https://www.bailii.org/uk/cases/UKFTT/TC/2021/TC08003.html 

Introduction
This case examines whether a property purchase involving a main house and an annex qualifies for Multiple Dwellings Relief (MDR) from Stamp Duty Land Tax (SDLT).

Example scenario where this case law principle is relevant
In real estate transactions involving properties with separate living units, such as a house with an annex, determining eligibility for MDR on SDLT can significantly affect tax liability. This case illustrates the complexities in assessing whether separate parts of a property can be considered individual dwellings for tax relief purposes.

The legal principles agreed upon
The tribunal found that both the main house and the annex did not individually qualify as separate dwellings for MDR purposes. The key legal principle was that for a part of a property to be considered a separate dwelling for MDR, it must be suitable for use as a single dwelling, factoring in privacy, security, and the ability to accommodate basic living needs independently.

General summary
Doe v Revenue and Customs delved into the specifics of SDLT and MDR, focusing on a property transaction involving a main house and an annex.  The appellants, Andrew and Tiffany Doe, argued that their property purchase should qualify for MDR, which would lower their SDLT liability. The tribunal examined whether the main house and annex were each suitable for use as separate dwellings. Despite the annex being self-contained with its own living facilities, the tribunal concluded that the property did not qualify for MDR because the annex and the main house could not be considered separate dwellings under the law. The decision was based on the property’s layout, which did not provide sufficient privacy and security for each part to be considered a separate dwelling. This case underscores the importance of the physical attributes and layout of a property in determining eligibility for MDR on SDLT, highlighting that not all properties with separate living units will qualify for such relief.

MDR Case: Each Part of Property Must Meet Single Dwelling Criteria for SDLT MDR Eligibility

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1Partridge v Revenue & Customs (STAMP DUTY LAND TAX – transaction involving multiple dwellings) [2021] UKFTT 6 (TC) (13 January 2021). Cite as: [2021] UKFTT 6 (TC). 

URL: http://www.bailii.org/uk/cases/UKFTT/TC/2021/TC07991.html 

Introduction
This case examines whether a property with a main house and an annex qualifies for multiple dwellings relief (MDR) from stamp duty land tax (SDLT).

➤ For a property to qualify for Multiple Dwellings Relief on SDLT, each part, like a house and annex, must independently meet the criteria for being a separate dwelling.

Example scenario where this case law principle is relevant
In real life, this principle applies when purchasing a property consisting of a main house and an annex. The buyers, believing both structures to be separate dwellings, might seek MDR on SDLT, potentially leading to disputes with tax authorities over the property’s classification.

The legal principles agreed upon
The tribunal concluded that for a property to qualify for MDR, each part must be suitable for use as a single, separate dwelling. This involves assessing the physical attributes and functionalities, such as separate entrances, kitchens, and bathrooms, to determine if they can independently satisfy basic living needs with reasonable privacy and security.

General summary
The Partridge v Revenue & Customs case centred on the purchase of a property by Edward and Clare Partridge, who sought MDR on SDLT, arguing that their property, comprising a main house and an annex, constituted multiple dwellings. 

HMRC disagreed, leading to an appeal. The tribunal’s decision hinged on whether the annex was suitable for use as a separate dwelling, considering factors like separate access, kitchen facilities, and the ability to live independently from the main house. Despite the annex having some separate facilities, the tribunal found it did not qualify as a separate dwelling due to shared access and the lack of a self-contained bathroom, among other reasons. 

The appeal was dismissed, reinforcing the principle that for MDR purposes, each part of a property must independently meet the criteria for a dwelling. This case underscores the importance of clear physical separation and functionality in determining the eligibility for MDR on SDLT, providing valuable guidance for future property transactions involving annexes or multiple structures.

MDR Case: Tribunal Dismisses Appeal for Multiple Dwellings Relief on Property Purchase

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024; however, if your property was bought before this date, you have until April 30, 2025, to submit a claim, provided it’s within one year of purchase.

Ralph v Revenue And Customs (Stamp duty land tax – purchase of house and separate building – multiple dwellings relief), Re [2023] UKFTT 901 (TC) (20 October 2023). Cite as: [2023] UKFTT 901 (TC). 

URL: http://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08969.html 

➤ To qualify for Multiple Dwellings Relief on SDLT, a separate building must have the necessary facilities and show independence at the time of the property purchase.

Introduction
The case revolves around an appeal against HM Revenue and Customs (HMRC) regarding the eligibility for Multiple Dwellings Relief (MDR) on Stamp Duty Land Tax for a property purchase that included a house and a separate annexe.

Example scenario where this case law principle is relevant
This principle is relevant in situations where a property purchase includes additional buildings, and the buyer claims MDR based on those buildings being suitable for use as separate dwellings. The case examines the criteria for a building to be considered a dwelling for tax relief purposes.

The legal principles agreed upon
The tribunal focused on whether the separate building (annexe) was “used or suitable for use as a single dwelling” or “in the process of being adapted for such use.” It was determined that for a building to be considered a dwelling, it must have certain facilities and characteristics at the time of the property transaction, specifically relating to the preparation of food and the building’s independence in terms of utilities and access.

General summary
The tribunal found that the annexe did not qualify as a separate dwelling at the time of the property transaction. Despite the appellant’s intentions and preparations to convert the annexe into a dwelling, physical adaptations had not begun by the completion date. Key factors in this decision included the lack of kitchen facilities, separate utility meters, and the annexe’s integration within the main property estate. 

The tribunal’s decision emphasises the importance of the physical state and functionality of a building at the transaction’s effective date when assessing eligibility for MDR on Stamp Duty Land Tax. The appeal was dismissed, highlighting the stringent criteria for a building to be considered a separate dwelling for tax relief purposes.

MDR Case: Planning Permission or Preparatory Work Does Not Qualify for Multiple Dwellings Relief (MDR)

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024; however, if your property was bought before this date, you have until April 30, 2025, to submit a claim, provided it’s within one year of purchase.

Ladson Preston Ltd AKA Developments Greenview Ltd v Revenue & Customs (STAMP DUTY LAND TAX- Multiple Dwellings Reliefr) [2021] UKFTT 251 (TC) (07 July 2021). Cite as: [2021] UKFTT 251 (TC), [2021] STC 1933, [2021] SFTD 1308, [2021] STI 1933.

URL: https://www.bailii.org/uk/cases/UKFTT/TC/2021/TC08197.html 

➤ Having planning permission or doing preparatory work does not meet the criteria for Multiple Dwellings Relief on Stamp Duty Land Tax; actual dwellings must exist or be in construction.

Introduction
The First-tier Tribunal ruled against Ladson Preston Ltd and AKA Developments Greenview Ltd in their appeals for Stamp Duty Land Tax relief on property transactions.

Example scenario where this case law principle is relevant
This ruling impacts property developers who acquire land with planning permission but have not yet constructed dwellings. It clarifies that merely having planning permission or undertaking preparatory work does not qualify for Multiple Dwellings Relief (MDR) under the Finance Act 2003.

The legal principles agreed upon
The Tribunal determined that for a transaction to qualify for MDR, the main subject matter must include an interest in at least two dwellings. Planning permission alone, or preparatory work such as borehole drilling, does not constitute the commencement of construction nor does it transfer as part of the property transaction. Therefore, these elements cannot be considered dwellings for the purpose of claiming MDR.

General summary
The Tribunal’s analysis focused on the nature of Stamp Duty Land Tax (SDLT) as a transaction-based tax. It emphasised that the relief under consideration, MDR, requires the transaction’s main subject matter to consist of an interest in at least two dwellings. The Tribunal clarified that planning permission and preparatory activities by the purchaser do not constitute a chargeable interest that can be acquired from the seller. Consequently, neither appellant met the criteria for MDR because the properties in question did not include dwellings or construction in progress at the time of the transactions. This decision underscores the specificity of SDLT regulations and the narrow interpretation of what constitutes a dwelling or the process of construction for the purposes of MDR. The ruling serves as a significant precedent for property developers regarding the eligibility criteria for SDLT relief.

MDR Case: Relief for Property Development Under FA 2003. Sole Residential Use. Waives Penalties

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1.

Pensfold v Revenue & Customs (STAMP DUTY LAND TAX – whether relief available) [2020] UKFTT 116 (TC) (14 November 2019). Cite as: [2020] UKFTT 116 (TC).

URL: http://www.bailii.org/uk/cases/UKFTT/TC/2020/TC07609.html 

➤ Relief for Stamp Duty Land Tax applies if a property is bought with the intent for commercial development, and penalties can be waived if reasonable care is taken to avoid inaccuracies.

Introduction
The Pensfold v Revenue & Customs case revolves around the eligibility for Stamp Duty Land Tax (SDLT) relief and the imposition of penalties for inaccuracies in tax returns.

Example scenario where this case law principle is relevant
In a situation where a company purchases property intending to develop it into an eco/agritourism venture, claiming SDLT relief under specific conditions, and later faces an inquiry from HMRC challenging the relief eligibility and imposing penalties for supposed inaccuracies.

The legal principles agreed upon
The tribunal agreed that relief under Para 5B Sch 4A Finance Act 2003 was applicable, as the property was acquired with the intention of developing it into a qualifying trade. It was determined that the property was solely residential, not mixed use, and that no penalties should be applied as the appellant took reasonable care to avoid inaccuracies.

General summary
The Pensfold case involved an appeal against HMRC’s decision to charge additional SDLT and penalties related to the purchase of Pensfold Farm. The tribunal found credible evidence supporting the appellant’s intention to develop the farm into an eco/agritourism business, qualifying for SDLT relief. Despite HMRC’s challenge, the tribunal concluded that the necessary conditions for relief were met at the time of purchase, including the intention to exploit the property commercially and the formulation of reasonable commercial plans. However, the property was deemed wholly residential, not mixed use, affecting the SDLT rate applied but not the relief eligibility. 

The tribunal also ruled that no penalties should be charged, as the appellant had taken reasonable care to avoid inaccuracies, relying on professional advice for the SDLT return. This decision highlights the importance of clear intentions and reasonable planning in qualifying for SDLT relief and the threshold for penalties related to tax inaccuracies.

MDR Case: Physical Dwelling Construction Required for Stamp Duty MDR Eligibility

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024.

Ladson Preston Ltd and AKA Developments Greenview Ltd v Revenue and Customs (STAMP DUTY LAND TAX – Multiple dwellings relief – whether buildings in process of being constructed for use as dwellings) [2022] UKUT 301 (TCC) (15 November 2022). Cite as: [2022] BTC 534, [2022] UKUT 301 (TCC).
URL: https://www.bailii.org/uk/cases/UKUT/TCC/2022/301.html 

➤ For Stamp Duty Multiple Dwellings Relief eligibility, construction of dwellings must physically begin by the time of property purchase, not just planned or permitted.

Introduction
This case involves a dispute over whether two companies were entitled to multiple dwellings relief (MDR) for stamp duty land tax (SDLT) purposes on acquisitions of land intended for residential development.

Example scenario where this case law principle is relevant
A real estate developer purchases land with the intention to build multiple residential units. They claim MDR on their SDLT return, arguing that the land acquisition includes the construction of dwellings, even though construction has not yet started.

The legal principles agreed upon
The tribunal clarified that for a property to qualify for MDR under SDLT rules, there must be a physical manifestation of a dwelling being constructed at the time of the transaction. Simply having planning permission or undertaking preparatory work does not suffice. The focus is on the nature of the chargeable interest acquired at the time of completion.

General summary
The case centred on Ladson Preston Ltd and AKA Developments Greenview Ltd’s appeals against a decision denying them MDR on their SDLT payments for land acquisitions. The tribunal examined whether buildings in the process of being constructed could qualify for MDR, emphasising that MDR’s applicability depends on the chargeable interest at the time of transaction completion. It concluded that activities or planning permissions prior to or after this point do not influence the SDLT chargeable interest. Specifically, the tribunal found that planning permission alone does not constitute a building in the process of being constructed. Furthermore, it determined that physical work done after the transaction’s completion date, even if on the same day, does not contribute to qualifying for MDR. The case highlights the importance of the physical state of the property at the time of transaction completion in determining SDLT liabilities, particularly regarding MDR eligibility. The decision underscores the need for clear physical evidence of dwellings being constructed to claim MDR, setting a precedent for how similar cases might be judged in the future.

MDR Case: Property Eligibility for Multiple Dwelling Relief Hinges on ‘Single Dwelling’ Suitability

(Case Law>Multiple Dwellings Relief Cases)

Multiple Dwellings Relief (MDR) ceased on June 1, 2024.

Fiander & Anor v Revenue & Customs (STAMP DUTY LAND TAX : transactions involving multiple dwellings) [2020] UKFTT 190 (TC) (09 April 2020). Cite as: [2020] UKFTT 190 (TC), [2020] SFTD 697, [2020] STI 1234.

URL: https://www.bailii.org/uk/cases/UKFTT/TC/2020/TC07676.html 

➤ Eligibility for Multiple Dwellings Relief on Stamp Duty depends on each part of the property being suitable for use as a separate dwelling.

Introduction
This case explores whether a property with a main house and an annex qualifies for multiple dwellings relief (MDR) from stamp duty land tax (SDLT).

Example scenario where this case law principle is relevant
In real life, this principle applies when purchasing properties that include separate living units, such as a house with an annex. Buyers might assume they qualify for tax relief under MDR, but the specific physical setup and use of the property can significantly impact this determination.

The legal principles agreed upon
The tribunal decided that for a property to qualify for MDR, each part must be “suitable for use as a single dwelling.” The connection between the main house and annex through a corridor and the lack of separate utilities and council tax bills played an important role in determining that the property did not qualify as multiple dwellings for SDLT relief purposes.

General summary
The Fiander & Anor v Revenue & Customs case centred on the purchase of a property consisting of a main house and an annex, connected by a corridor. The buyers, Keith Fiander and Samantha Brower, argued that the property qualified for MDR from SDLT, which would lower their tax liability. The main issue was whether the main house and annex each counted as separate dwellings. The tribunal examined various factors, including the physical connection between the two structures, the annex’s lack of separate utilities and council tax, and the property’s overall suitability for use as separate dwellings. 

Ultimately, the tribunal concluded that the property did not qualify for MDR because the main house and annex were not suitable for use as separate dwellings, primarily due to their physical connection and shared facilities. 

This decision emphasises the importance of the physical attributes and use of property parts in determining eligibility for SDLT relief under the MDR provision.

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This Article Written By Nick Garner
Founder Stamp Duty Advice Bureau
Author of Stamp Duty Land Tax Guide
For Property Investors.