The FTT has dismissed an SDLT appeal concerning the meaning of “residential property” within FA 2003, s. 116(1) – Faiers v HMRC [2023] UKFTT 297 (TC).
The taxpayer acquired a property and initially paid SDLT on the basis that the transaction was one of acquiring only residential property. He subsequently amended his return, however, on the basis that the property should have been classified as mixed or non-residential, as an electricity company operated a commercial electricity distribution network on it. The technical issue was therefore “whether the presence of the power network means that at least some of this land is not comprised within the grounds of the dwelling”.
The taxpayer gave evidence that the presence of a pole and of two high voltage electricity cables crossing the property meant that he and his family were restricted from carrying out certain activities, including flying kites, using water pistols, playing ball games, planting trees as a windbreak, etc.
Counsel for the taxpayer argued that “once part of the land is used for a commercial purpose, it cannot as a matter of law form part of the garden or grounds of a dwelling within s. 116(1)(b)”.
The FTT commented, however, that “one person having rights over another’s land will not of itself prevent that land constituting the grounds of the second person’s dwelling, if it otherwise would”. In rejecting the taxpayer appeal, the FTT gave its reasoning as follows:
“(1) The land in question is contiguous with and surrounds the dwelling. No part of it is separated by a road or similar physical feature. There is no suggestion that the land is more extensive than might be appropriate. There is no suggestion that the land has been used otherwise for its present purpose.
(2) I accept that the electricity distribution network is part of a commercial operation carried on by a third party, but I have already held that this factor in itself is not determinative.
(3) The level of physical intrusion (one pole and some overhead cables) is not extensive. The wires and pole do not affect the layout/appearance of the land to any material extent and do not physically “break up” the land. The appearance of the land is of a coherent whole over which the cables pass.
(4) The safety issues which the transmission of electricity generate restrict the activities which can be carried on close to the cables, but they do not prevent the landowner doing anything at all under the cables. Grass can be mown, so that the land under and around the cables is indistinguishable from the rest of the land. Low-level activities (such as cultivation or sheep grazing) can be carried on safely under the cables. The photographic evidence shows that the relevant land is well maintained, and the children’s play fort has been erected in proximity to the wires and pole.”
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08768.html
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