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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Gabra & Anor v Revenue and Customs (STAMP DUTY LAND TAX - Multiple Dwellings Relief (FA 2003 Sch 6B) - Entitlement to claim relief - Suitable for use as a single dwelling - The process of being adapted) [2025] UKFTT 399 (TC) (04 April 2025) URL: https://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09473.html Cite as: [2025] UKFTT 399 (TC)

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FIRST-TIER TRIBUNAL
TAX CHAMBER

		Taylor House, London
		Heard On: 14 January 2025 Judgment Date: 4 April 2025

STAMP DUTY LAND TAX—Multiple Dwellings Relief (FA 2003 Sch 6B)—Entitlement to claim relief—Suitable for use as a single dwelling—The process of being adapted—appeal dismissed

DECISION

Introduction

1. This appeal concerns Stamp Duty Land Tax (SDLT). In particular whether the Appellants benefit from Multiple Dwellings Relief (MDR) on the purchase of The Willows, a property on Hayling Island, for £1,569,000 (the Purchase).
2. The Appellants' case is that The Willows comprises two dwellings rather than one dwelling: a large house (the Main House) and a separate office/games room (the Annexe) (described more fully below). Consequently, MDR is available. The Appellants filed their SDLT return (the Return) on this basis. HMRC say that The Willows comprises of a single dwelling and therefore MDR is not available.
3. If the Appellants are correct the SDLT due is £28,493. If HMRC are correct the SDLT due is £87,150, a difference of £58,657.
4. For the reasons given it is our decision that MDR is not available and therefore we dismiss the Appellants' appeal.

the authorities

The legislation

5. SDLT is chargeable pursuant to s 42 Finance Act 2003 (FA 2003) on 'land transactions'.
6. A land transaction is defined by s43(1) FA 2003:

In this Part a "land transaction" means any acquisition of a chargeable interest. As to the meaning of "chargeable interest"  see section 48.

7. s43(6) FA 2003 provides:

References in this Part to the subject-matter of a land transaction are to the chargeable interest acquired (the "main subject-matter"), together with any interest or right appurtenant or pertaining to it that is acquired with it.

8. A chargeable interest is defined by s48(1) FA 2003 as:

In this Part "chargeable interest" means—

(a)   an estate, interest, right or power in or over land in England or Northern Ireland, or

(b) [not relevant],

other than an exempt interest.

9. s49 FA 2003 provides that a land transaction is a 'chargeable transaction' unless it is exempt. In this case the parties agree that the Purchase was a chargeable transaction and no exemptions are relevant.
10. s58D FA 2003 introduces MDR by reference to Schedule 6B FA 2003. Relevant to this appeal is paragraph 2 of that schedule:

(2)  A transaction is within this sub-paragraph if its main subject-matter consists of—

(a)  an interest in at least two dwellings, …

Paragraph 2(5) Schedule 6B FA 2003 provides:

A reference in this Schedule to an interest in a dwelling is to any chargeable interest in or over a dwelling.

The parties agree that paragraphs 2(3) and 2(4) Schedule 6B FA 2003 are not relevant to this appeal.

11. Paragraph 7 Schedule 6B FA 2003 establishes what is a dwelling for the purposes of that schedule:

(2)  A building or part of a building counts as a dwelling if—

(a)  it is used or suitable for use as a single dwelling, or

(b)  it is in the process of being constructed or adapted for such use.

12. s55 FA 2003 provides for the applicable rates of SDLT by reference to various factors.
13. Subject to non-relevant exceptions, s119(1)(a) FA 2003 defines the concept of the 'effective date' of a land transaction as 'the date of completion'.

The case law

14. Ladson Preston Limited (1) and AKA Developments Greenview Limited (2) v HMRC [2022] UKUT 301 (Ladson) at [62] sets out:

Rather, as we have noted, paragraph 2 asks a question about the nature of the chargeable interest that AKA acquired. Moreover, in the circumstances of these appeals, the effective date of the transactions was the date on which the relevant land transactions completed (as there is no question of s44 of FA 2003 operating so as to treat the date of substantial performance as being the effective date). The chargeable interest that AKA acquired was the chargeable interest as it stood at the very time of completion. That conclusion depends, not on any definition of "effective date" but on an analysis of the nature of the chargeable interest acquired which is required by paragraph 2(2) of Schedule 6B.

[Underlining added.]

15. Fiander and Brower v HMRC [2021] UKUT 156 (Fiander) is the leading authority on whether a dwelling is used or suitable for use as a single dwelling. Fiander at [48] provides:

We must therefore interpret the phrase giving the language used its normal meaning and taking into account its context. Adopting that approach, we make the following observations as to the meaning of "suitable for use as a single dwelling":

(1) The word "suitable" implies that the property must be appropriate or fit for use as a single dwelling. It is not enough if it is capable of being made appropriate or fit for such use by adaptations or alterations. That conclusion follows in our view from the natural meaning of the word "suitable", but also finds contextual support in two respects. First, paragraph 7(2)(b) provides that a dwelling is also a single dwelling if "it is in the process of being constructed or adapted" for use as single dwelling. So, the draftsman has contemplated a situation where a property requires change, and has extended the definition (only) to a situation where the process of such construction or adaption has already begun. This strongly implies that a property is not suitable for use within paragraph 7(2)(a) if it merely has the capacity or potential with adaptations to achieve that status. Second, SDLT being a tax on chargeable transactions, the status of a property must be ascertained at the effective date of the transaction, defined in most cases (by section 119 FA 2003) as completion. So, the question of whether the property is suitable for use as a single dwelling falls to be determined by the physical attributes of the property as they exist at the effective date, not as they might or could be. A caveat to the preceding analysis is that a property may be in a state of disrepair and nevertheless be suitable for use as either a dwelling or a single dwelling if it requires some repair or renovation; that is a question of degree for assessment by the FTT.

(2) The word "dwelling" describes a place suitable for residential accommodation which can provide the occupant with facilities for basic domestic living needs. Those basic needs include the need to sleep and to attend to personal and hygiene needs. The question of the extent to which they necessarily include the need to prepare food should be dealt with in an appeal where that issue is material.

(3) The word "single" emphasises that the dwelling must comprise a separate self-contained living unit.

(4) The test is objective. The motives or intentions of particular buyers or occupants of the property are not relevant.

(5) Suitability for use as a single dwelling is to be assessed by reference to suitability for occupants generally. It is not sufficient if the property would satisfy the test only for a particular type of occupant such as a relative or squatter.

(6) The test is not "one size fits all": a development of flats in a city centre may raise different issues to an Annexe of a country property. What matters is that the occupant's basic living needs must be capable of being satisfied with a degree of privacy, self-sufficiency and security consistent with the concept of a single dwelling. How that is achieved in terms of bricks and mortar may vary.

(7) The question of whether or not a property satisfies the above criteria is a multi-factorial assessment, which should take into account all the facts and circumstances. Relevant facts and circumstances will obviously include the physical attributes of and access to the property, but there is no exhaustive list which can be reliably laid out of relevant factors. Ultimately, the assessment must be made by the FTT as the fact-finding tribunal, applying the principles set out above.

the issues

16. The issue between the parties is whether the Appellants are entitled to MDR pursuant to paragraph 2(2) Schedule 6B FA 2003 in reliance on: (i) paragraph 7(2)(a) Schedule 6B FA 2003 as their primary case; or (ii) in the alternative 7(2)(b) Schedule 6B FA 2003.
17. Inserting the facts of this appeal into the statutory wording, the issues to be determined are whether the Purchase consisted of an interest in at least two dwellings because:

(a) the Annexe was used or suitable for use as a single dwelling; or

(b) the Annexe was in the process of being adapted for use as a single dwelling.

18. The burden of proof is on the Appellant, the standard of proof is on the balance of probabilities.

parties' submissions

19. We are grateful to the representatives for their skeletons, submissions, and willingness to engage with our questions.  We set out below our summary of those submissions on the law and the facts.  The parties should, however, be assured that when preparing this decision, the terms of the skeletons were reread and our notes of the hearing reviewed.  Because we do not deal specifically with any point does not mean that it was not considered in the round when reaching our decision.

the facts

20. The facts of this appeal were largely agreed. The hearing bundle contained documentary evidence. Mrs Gabra also provided a witness statement and gave oral evidence during the hearing. We set out the agreed facts first and then explain our findings of facts on the points of dispute, and where some discussion is required.
21. Mrs Gabra's evidence as to fact was largely uncontested, where it was contested Mrs Gabra's evidence was supported by photographs and as discussed below we accept her evidence. We found Mrs Gabra to be a reliable and credible witness.

The facts not in dispute and findings of fact from photographs exhibited to Mrs Gabra's witness statement

22. We make the following findings of fact that were not in dispute or are made on the basis of photographs exhibited to Mrs Gabra's witness statement (where this is the case we refer to photographs). We find as follows:

(1) On 11 June 2021 the Appellants purchased:

(a) an 800mm Quadrant Shower Enclosure WC Bathroom Suite Package [the rest of the product name is absent] for £299.95 that was sufficient for a shower/toilet room to be subsequently installed in the Annexe; and

(b) a White Grey Kitchen Sink Unit Base Cupboard 80cm 800mm Cabinet bo[the rest of the product name is absent] for £159.95 that was sufficient for a kitchenette (described more fully below) to be subsequently installed in the Annexe.

(2) The Purchase completed on 23 June 2021.

(3) The Willows has one Title Number at the Land Registry.

(4) At the time of completion, relevant to this appeal, The Willows consisted of the following set in approximately 1.75 acres of grounds:

(a) A front drive including a car port.

(b) The Main House.

(c) A separate building consisting of the Annexe connected to 3 stables (the Stables) that:

(i) is located towards the end of the garden approximately 230 feet away from the Main House;

(ii) is not physically connected to the Main House;

(iii) has its own water, sewage and drainage system;

We make further detailed findings about this building below.

(d) A swimming pool.

(e) A pool room. Mrs Gabra's photographic evidence shows that the pool room is located on the patio surrounding the pool, and is proximate to the pool. Further, that once through the main door to the pool room there is a shower cubicle. Turning right once you are in the pool room is another door behind which is a toilet and a sink.

(f) An unsheltered 'outdoor kitchen' that included a BBQ, sink and 2 under the counter fridges adjacent to the pool room.

(g) A shed.

(h) A tennis court.

(5) At the time of completion the Annexe had its own electricity fuse box and air-conditioning/heating system.

(6) At the time of completion the Stables had three cold water butler sinks.

23. On 23 June 2021 but after the Appellants had received the keys to The Willows a builder installed the products purchased by Mrs Gabra on 11 June 2021 (the Works). Consequently, as shown by Mrs Gabra's photographic evidence the Annexe now has:

(1) A separate bathroom with a shower, toilet and sink.

(2) A kitchenette consisting of a sink and draining board, a small work area (approximately the width of a standard kitchen cupboard size), some cupboard storage and a fridge freezer.

24. The Appellants engaged the builder prior to the time of completion of the Purchase.

Other findings of fact

25. Mrs Gabra's evidence was that the Annexe has its own separate entrance. HMRC's submissions disputed this. Mrs Gabra's witness statement provided photographs of a side gate to the Main House which would clearly allow access to the Annexe without the need to enter the Main House. There was no evidence from the Appellants that the side gate could only be used to access the Annexe. Therefore, we find as fact that at the time of completion the Annexe could be accessed without entering the Main House via a side gate that was shared with the Main House.
26. Mrs Gabra's witness statement asserted that prior to completion of the Purchase:

(1) The Annexe had been used for visitors and friends. With guests able to stay, work and sleep in the Annexe using the pool room shower and toilet to meet their needs.

(2) The Annexe had a wooden bar equipped with equipment such as a kettle, toaster, microwave and mini-fridge.

It is not clear to us where Mrs Gabra's knowledge about the prior use and equipping of the Annexe came from. However, we do accept that the Annexe could be used by a particular type of occupant (discussed more fully below) in the way described at (1) and equipped in the way described at (2).

27. When pressed under cross-examination as to whether the Works took place after the time of completion, Mrs Gabra repeated that they had taken place on the day of completion but, as we have found as fact above (on the basis of Mrs Gabra's evidence), after the Appellants had received the keys to The Willows. Regarding the timing of the Works our starting point is that earliest the Appellants received the keys was at the time of completion because that is the moment when they acquired their interest in The Willows. It is not impossible that the Appellants may have received the keys for The Willows prior to completion but that would be unusual (as it would be before they had acquired their interest in The Willows) and they led no precise evidence to that effect. Therefore, as on Mrs Gabra's evidence the Works commenced after the Appellants received the keys to The Willows we find as fact that the Works commenced after the time of completion.

The arguments

28. The Appellants' case is that The Willows, in summary, consists of two dwellings for the purpose of paragraph 2(2) Schedule 6B FA 2003 entitling them to MDR. Their primary reason for saying this is that the Annexe was used or was suitable for use as a single dwelling pursuant to paragraph 7(2)(a) Schedule 6B FA 2003. If we do not accept this then the Appellants say it is because the Annexe was in the process of being constructed or adapted for use as a single dwelling pursuant to paragraph 7(2)(b) Schedule 6B FA 2003. HMRC say that neither is correct.

The Appellants' case

Paragraph 7(2)(a) Schedule 6B FA 2003

29. The Appellants' paragraph 7(2)(a) Schedule 6B FA 2003 case proceeds on the basis of the facilities and features of the Annexe before the Works were completed. In particular the Appellant says that the Annexe was suitable for use as a single dwelling pursuant to paragraph 7(2)(a) Schedule 6B FA 2003 because:

(1) Kitchen facilities were available via the outdoor kitchen and the Annexe could be provided with a kettle, toaster, microwave and mini-fridge.

(2) Washing facilities were provided by access to the sink, toilet and shower in the pool room.

(3) An appropriate level of privacy existed as the Annexe could be accessed through the side gate so no access was required to the Main House and the Annexe is 230 feet from the Main House.

(4) The Annexe and Stables had water, sewage and drainage systems separate to the Main House.

(5) The Annexe had its own fuse box and air-conditioning/heating system.

Paragraph 7(2)(b) Schedule 6B FA 2003

30. The Appellants' case is that the Annexe was in the process of being adapted for use as a single dwelling because Mrs Gabra had purchased the items referred to above and engaged the builder prior to completion. Further, the Works were 'carried out' on the day of completion and the Works were minor.

The Respondents' case

Paragraph 7(2)(a) Schedule 6B FA 2003

31. The Respondents say that, for the reasons set out below, the Annexe lacked sufficient facilities at the time of completion for it to be suitable for use as a single dwelling pursuant to paragraph 7(2)(a) Schedule 6B FA 2003.

Kitchen facilities

32. The Respondents highlight the absence of a sink, full-size fridge freezer, washing machine, cooker / hob and cooker socket control. Their overarching point is that the Annexe did not have a suitable kitchen to cook.

Washing facilities

33. The Respondents' position is that the Annexe did not have any washing facilities to attend to personal and hygiene needs: it had no bath, shower, toilet or sink. They say it is not reasonable for occupants to have access to another building, here the pool room, to attend to those needs.

Privacy, security and access

34. The Respondents say that essential to the character of The Willows is the size of the property and its ability to offer privacy, peace and a sense of space. The Respondents say that this is curtailed for occupants of the Annexe and the Main House by having to share the front drive.

Paragraph 7(2)(b) Schedule 6B FA 2003

35. The Respondents' position is that Works commenced after the time of completion. Therefore the Appellants' paragraph 7(2)(b) Schedule 6B FA 2003 cannot succeed.

discussion

Utility of other First-tier Tribunal cases

36. The utility of other First-tier Tribunal cases concerning the application of paragraph 7(2)(a) Schedule 6B FA 2003 has been commented on in two recent First-tier Tribunal cases. See James Winfield v HMRC [2024] UKFTT 734 (TC):

16. It is equally clear that the facts and circumstances, and weight which is attached to the facts and circumstances vary considerably, and we should be very cautious of deriving principles from other cases which have very different fact patterns.

and Benjamin Packman (1) and Miranda Wood (2) v HMRC [2024] UKFTT 954 (Packman):

22. We were referred to a number of first instance decisions on both sides, however, for the reasons given in Winfield we do not derive any real assistance from them as their fact patterns are different, and none establish any new principle.

23. Both parties' attempts to piece together, jigsaw like, individual findings from individual cases is not in the end helpful where we must conduct a multi-factorial exercise on the facts as a whole as we find them to be in this case.

We agree with those comments and will proceed as the Tribunal sets out in the underlined quote from Packman above.

Timing

37. Ladson at [61 – 63] is clear authority for the proposition that when completion occurs on the effective transfer date, we should apply the requirements of paragraph 2(2) Schedule 6B FA 2003 by reference to the chargeable interest as it stood at the time of completion, that being the chargeable interest that the Appellants acquired. Paragraph 7(2) Schedule 6B FA 2003 tells us what counts as a dwelling for the purposes of Schedule 6B FA 2003 including paragraph 2(2) Schedule 6B FA 2003. Therefore we must also apply the requirements of paragraph 7(2) Schedule 6B FA 2003 by reference to the chargeable interest as it stood at the time of completion.

Paragraph 7(2)(a) Schedule 6B FA 2003

38. Both Mr Callard and Mrs Man rightly directed us to [48] in Fiander as to how to approach the question of whether a property, here the Annexe, is used or is suitable for use as a single dwelling pursuant to paragraph 7(2)(a) Schedule 6B FA 2003.
39. As set out at Fiander at [48(2)] a dwelling provides the occupant with facilities to meet basic domestic living needs, which includes personal and hygiene needs. For occupants generally facilities to meet personal and hygiene needs, in our view, require at least a toilet, a sink and a shower/bath. It is the Appellants' case that these are provided by the, or a combination of the pool room, the butler sinks in the Stables and the sinks in the outdoor kitchen none of which form part of the Annexe and are shared with the occupants of the Main House. As we have found above a sink, a toilet and a shower were only installed in the Annexe following the Works which commenced after completion.
40. We have considered the circumstances and factors above and on balance our conclusion is that, at the time of completion the Annexe did not have sufficient facilities to meet, by reference to occupiers generally, basic living needs nor is it a 'separate self-contained living unit' as it has no toilet, sink or shower/bath. This lack of such basic provision cannot be overcome even if we proceeded on the basis that all the other features of the Annexe the Appellant has highlighted pointed to the opposite conclusion ie that the requirements of paragraph 7(2)(a) Schedule 6B FA 2003 were met. Nor can this be overcome on the basis that a particular class of occupiers (such as relatives or close friends) would not require a toilet, a sink or a shower/bath. Therefore, our conclusion is that the time of completion the Annexe was not used nor suitable for use as a single dwelling pursuant to paragraph 7(2)(a) Schedule 6B FA 2003 and consequently MDR is not available on this basis.

Paragraph 7(2)(b) Schedule 6B FA 2003

41. The Upper Tribunal in Ladson considered the question of what was required in order to consider whether a building or part of a building was in the process of being constructed for 7(2)(b) Schedule 6B FA 2003. That is not the question we are considering in this appeal but the Upper Tribunal's approach is instructive. Following the Upper Tribunal's approach and focussing on those parts of the definition that is relevant to this appeal paragraph 7(2)(b) Schedule 6B FA 2003 provides:

A building [the Annexe]… counts as a dwelling if …. it [the Annexe] is in the process of being adapted…. [for use as a single dwelling]

By analogy with the Upper Tribunal's approach in Ladson at [38], in our judgment, the Annexe can only be said to be "in the process of being adapted" if there is some physical process of adaptation happening to the Annexe and not whether some more general process of adaptation has begun (that does not immediately bear any connection with the land/dwelling). Without such a physical process there may be an intention to adapt a building, perhaps even a firm intention, but there is no building that is in the process of being adapted. We have found as fact that at the time of completion Mrs Gabra had purchased the products referred to above and organised a builder to fit them however neither of these actions constitute a physical process of adaptation happening to the Annexe. Further the Works had not begun at the time of completion. Therefore, the requirements of paragraph 7(2)(b) Schedule 6B FA 2003 are not met and MDR is not available on this basis.

conclusion

42. For the reasons given above we dismiss the Appellants' appeal.

Right to apply for permission to appeal

43. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to "Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)" which accompanies and forms part of this decision notice.
Release date: 04^th APRIL 2025