In the case of Vereley Homes Ltd v HMRC [2026] UKFTT 695 (TC), the company has lost its appeal against an HMRC decision that a sale of property, consisting of two titles, was purely residential for SDLT purposes.
SDLT – residential property – garden or grounds – appeal dismissed
The two titles had been under common ownership and had originally been two separate houses, No. 7 and No. 9. No. 9 had been demolished. Broadly speaking, the back garden of No.9 was integrated with the garden and grounds of No.7 (together, “Plot 1”), whilst the footprint of the house that was at No.9, together with its former front garden, was fenced-off and turfed (“Plot 2”). Plot 2 was accessible via a gate leading to the road. It was disputed whether Plot 2 was deliberately accessible from Plot 1 via a gap in the fence. HMRC argued that Plot 2 was part of the garden or grounds of Plot 1 and thus the property was residential for the purposes of FA 2003, s. 116. The FTT summarised the technical position as follows:
“The only issue in the appeal is whether or not Plot 2 is part of the garden or grounds of the house on Plot 1 for the purposes of section 116(1)(b) and paragraph 18(3) of Schedule 4ZA FA 2003. It is accepted by the parties that if section 116(1)(b) is satisfied then paragraph 18(3) of Schedule 4ZA will also be met.
If Plot 2 is not part of the garden or grounds of the house on Plot 1 then it is common ground that the entire transaction is treated as non-residential: s 55 FA 2003. If the transaction is non-residential it is subject to the lower rates of SDLT provided for in Table B of s 55 FA 2003.
If the transaction is residential, because the purchaser is a company, then it is subject to the higher rates specified in the substitute Table A in paragraph 1(2) Schedule 4ZA FA 2003.”
Reviewing the evidence, including photos apparently taken some years ago, the FTT concluded that:
“I find that the gap in the fence is deliberately made. From Figure 5 there appears to be a clean break in the fence at that point. The 50cm concrete area is in front of the gap in the fence. This suggests that either the gap or the concrete (or both) were located where they are to mitigate the height difference between Plot 1 and Plot 2.
Given the well-kept appearance of Plot 2 in Figure 6 I find that Plot 2 was used as a garden for the house on Plot 1, which was accessed by means of the gap in the fence. That is also consistent with Mr White’s letter, that suggests the intention was for Plot 2 to be a (memorial) garden. The concrete in front of that gap will have acted as a step to mitigate the height difference. The partial fencing off from Plot 1 may have been done to assist reflection in a memorial garden.
By the time of sale that access route from Plot 1 to Plot 2 had become overgrown, such that it was not visible to either Mr Alex Brown or Mr Eliot Brown when they visited the site. There is no evidence that the house was occupied between Mr Sansom’s death in 2020 and the acquisition in September 2023. We see from Figure 5 that Plot 2 had become overgrown too. However, I consider it likely that such overgrowth could be relatively easily paired back and the access route reinstated. In those circumstances, I do not consider that the access route being overgrown prevented there from being a connection between Plot 1 and Plot 2 at the point of the acquisition.”
On the contrary, there was no evidence that Plot 2 was “used or occupied for a purpose separate from and unconnected with the dwelling on Plot 1”. The FTT therefore judged that:
“Standing back and viewing the evidence in the round, having regard to the factors in Suterwalla, I find that Plot 2 was part of the grounds and garden of the house on Plot 1 at the time of the acquisition.
Accordingly the appeal is dismissed.”
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/695
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