No time extension to claim MDR after failure of mixed-use property claim

Monday, 19 February 2024
Property buyers who unsuccessfully claim mixed-use relief from stamp duty land tax (SDLT) on the basis that a property is non-residential cannot go back and make a late claim for multiple dwellings relief (MDR), the Upper Tax Tribunal has confirmed.

The case was HMRC v Ridgway (2024 UKUT 00036), in which the taxpayer paid GBP6.5 million for a property comprising two separate titles. One was a semi-detached house and gardens, the other an adjoining plot with separate access and a building previously used as a garage or studio. Acting on his solicitor's advice, Ridgway claimed mixed-use relief from stamp duty on the basis that the garage was in commercial use at the time of the sale, because he had invited the sellers to grant a six-month commercial lease to a photographic studio business.

This would have saved him GBP570,000 in stamp duty, but HMRC rejected it. Ridgway's subsequent appeal to the First-tier Tax Tribunal (FTT) was also rejected on the basis that the property was suitable for use as a dwelling, and that the grant of the lease brought it under the scope of the stamp duty anti-avoidance provisions.

Ridgway's contingency plan had been to claim MDR from the stamp duty due on the purchase, which would have saved him GBP311,000 on the full amount. However, by the time his mixed-use claim had been rejected, he was past the time limit to claim MDR. He duly appealed to the Upper Tax Tribunal, challenging the FTT's decision and also requesting permission to make an out-of-time claim for MDR.

He has now lost on both counts. The Upper Tribunal agreed with the FTT on residential use, but more significantly also declared that there is no provision for him to make a claim for MDR out of time.

'We accept that HMRC's position might be said to give rise to unfairness to taxpayers in the position of Mr Ridgway', the tribunal admitted but in its defence cited the England and Wales Court of Appeal's ruling in Candy v HMRC (2022 EWCA Civ 1447). 'SDLT is a self-assessed tax which imposes hard-edged deadlines', said the tribunal. 'Where a relief requires a claim, and a claim is not made in accordance with any procedural requirements, the taxpayer will not be entitled to relief.' It was clear that relief can only be claimed in a return or an amended return, but Ridgway made an error in concluding that the property was non-residential, it said.



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