Judge Kicks Out HMRC Stamp Duty Claim
A couple had won a row with HMRC over if they should have paid more stamp duty when they bought a derelict bungalow that was unsuitable for them to live in.
HM Revenue & Customs challenged the claim by Paul and Nikki Bewley that the bungalow in the West Country seaside town of Weston super Mare was a wreck.
HMRC argues that they were investors who should have paid a higher stamp duty rather than £1,500 and that the property was still home even though it was riddled with asbestos and had no heating or boiler.
A revised stamp duty bill was then sent demanding a £7,500 payment.
The couple presented HMRC with reports from specialists who said their work included a destructive survey smashing holes in walls, floors and ceilings, describing the home as a ‘derelict bungalow to be demolished’.
But HMRC insisted the property was a home and repeated demands for the extra cash.
The Bewleys appealed the tax assessment to the First-Tier Tribunal, sitting in Bristol.
HMRC argued that a dilapidated property does not stop being suitable as a home. Still, Judge Richard Haarer said this was irrelevant, and the real test was if the property was a home when purchased, not at some time in the future.
“The purchase of the land and building by the appellant, given our decision that the building was not suitable to be used as a dwelling and the fact that it was not so used at the time of purchase, means that it was non-residential,” he said.
The judge explained that this meant non-residential stamp duty rates should apply and decided HMRC had overcharged the couple stamp duty, reduced the assessment to £1,000 and upheld their appeal.
HMRC was given leave to appeal the decision.
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Tax is an aspect of residential property investment which is often overlooked. There are many twists and turns to consider at all levels, whether for income tax, capital gains tax or inheritance tax. It is vital to get the ownership structure right and ensure that all tax relief, allowances, and claims are made.