A man recently succeeded in his argument that a property he had purchased consisted of two separate dwellings and therefore qualified for Multiple Dwellings Relief (MDR) from Stamp Duty Land Tax (SDLT). Although MDR was abolished earlier this year, it can still be claimed in respect of transactions that completed before 1 June.

The man had acquired the property for £1.8 million in December 2021. He filed his SDLT return on the basis that the property consisted of two dwellings and MDR was therefore available. He assessed his SDLT liability at £70,000. HM Revenue and Customs (HMRC) contended that the property consisted of a single dwelling and issued a closure notice amending the return, increasing the amount of SDLT payable by £59,750. The man appealed to the First-tier Tribunal (FTT).

HMRC argued that there was insufficient internal separation between the dwellings, and the internal doors did not provide the necessary degree of soundproofing. It was possible to see into the rooms of each dwelling from the other: HMRC contended that, the property being in a rural setting, an occupier would expect a greater degree of privacy than the dwellings offered. HMRC also pointed out that the dwellings shared a boiler and electricity supply, and had a single council tax account and postal address.

The man contended that the dwellings were clearly suitable for use as separate dwellings. They had separate entrances and substantial internal doors, providing soundproofing and independence. While it was not possible to identify the units of oil or electricity used by each dwelling, the usage could be apportioned according to a tenancy agreement, as commonly happens in such situations.

The FTT considered that the internal doors served as an effective barrier between the dwellings, providing 'wholly effective' security and privacy. It noted that it was not uncommon for properties in rural areas to overlook each other and that any lack of privacy did not seem to affect people's willingness to buy such properties. The fact that the dwellings did not have separate council tax accounts or postal addresses was nowhere near sufficient to outweigh the facts of their physical attributes and facilities.

Allowing the appeal, the FTT concluded that each dwelling was suitable for use as a single dwelling and the purchase therefore benefited from MDR.