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Upper Tribunal clarifies SDLT dwelling suitability: multi-factorial assessment over time; rejects snapshot habitability and de minimis timing (Mudan v HMRC)

Published on: 08 October 2024

Published by a LexisNexis Tax expert
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Mudan and another v HMRC [2024] UKUT 307 (TCC)

In August 2019, the taxpayers purchased a property in London and at first paid SDLT on the footing that it was a residential property. They subsequently amended their return, instead treating the property as non-residential. They contended that substantial work was needed before it was safe for them to live there. The works undertaken included:

  • rewiring
  • installing a new boiler
  • putting a new roof over the boiler house
  • repairing broken windows
  • stripping out the kitchen
  • tanking the basement
  • clearing lots of rubbish from the house and garden

Accordingly, they argued that, at the effective date, the building was not suitable for use as a dwelling and therefore was not residential property within section 116(1) of the Finance Act 2003. Following an enquiry, HMRC issued a closure notice determining that the residential rates applied. The taxpayers appealed, but the First-tier Tax Tribunal...

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