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SDLT on land purchase

Some building work has started (now stopped)

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This is bit of a long shot but here goes:

I am aware of the recent case in respect of SDLT on uninhabitable residential properties and the fact that these should be dealt with for SDLT purposese as non residential properties and thus not subject to the 3% surcharge.

However, if a client purchases land where some building work has started (very little actually, just built up to damp course to keep planning open), is there a way of saying that this is also non residential?

HMRC's definition of a dwelling includes a property which is (or could be) used as a dwelling or is in the process of being constructed or adapted into a dwelling. I assume the latter part is relevant to this scenario, but how do you determine something is being constructed? e.g. the work to date was carried out over 12 months ago and has now stopped!

Replies (22)

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By Justin Bryant
29th Jul 2020 17:48

Yes indeed, an uninhabitable brick upon foundations can be residential per the link below, but not an uninhabitable derelict building per the relevant case law.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdlt...

Mad. Another (random) SDLT madness example is here: https://www.taxation.co.uk/articles/readers-forum-two-houses

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By Tax Dragon
29th Jul 2020 18:29

What did s/he buy it for? If to restart the work and construct a dwelling, then I would say the building is in the process of being constructed for use as a dwelling. If not, then not.

(And it's not "HMRC's definition". It's statute.)

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Replying to Tax Dragon:
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By Justin Bryant
30th Jul 2020 08:48

No. The bricks on foundations definition is solely HMRC's. There is no statutory definition. Wrong again on SDLT. Quelle surprise!

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Replying to Justin Bryant:
Psycho
By Wilson Philips
30th Jul 2020 09:01

Another example of your inability to read properly. It’s no wonder that you continually cite cases that are of no relevance to your argument.

TD will correct me if I’m wrong but I suspect that he was referring to the OP’s words, not yours.

“HMRC's definition of a dwelling includes a property which is (or could be) used as a dwelling or is in the process of being constructed or adapted into a dwelling.”

It’s not HMRC’s definition - that’s the wording in statute.

Now I know that you can’t admit that you’re wrong so I’ll duck out now.

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Replying to Wilson Philips:
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By Justin Bryant
30th Jul 2020 09:09

That's not a definition though is it (HMRC's definition is in the above link as I said)? Go and buy a dictionary I suggest (or some SDLT text books at least).

Your photo is very apt BTW (the SDLT advisor from hell).

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Replying to Justin Bryant:
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By Tax Dragon
30th Jul 2020 09:32

You're right, Justin. Everything you say is right.

HMRC defines. Statute interprets.

Silly me.

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Replying to Tax Dragon:
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By Justin Bryant
30th Jul 2020 09:42

In case you lack tax text books (like the other bloke above clearly does) I think you'll find HMRC has plenty of definitions for plenty of tax issues (think of 20% re ER) and the court will interpret the legislation and decide if HMRC's definition is right or not.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
30th Jul 2020 09:42

FA 2003 s116:

"116Meaning of “residential property”

(1)In this Part “residential property” means—

(a)a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, and ..."

That sounds very much like a statutory definition to me.

What you have been referring to is the meaning of "in the process of being constructed etc" and there is nothing wrong with that. However, TD was most certainly not wrong in pointing out to the OP that the cited definition of a residential property was the statutory definition, not HMRC's. You own him/her an apology - though I doubt that one will be forthcoming. You also owe me an apology, but again I'm not holding my breath.

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Replying to Wilson Philips:
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By Justin Bryant
30th Jul 2020 09:46

Blimey, it's a lot more apt than I first thought (we are obviously talking about the meaning of a building in the course of construction)!!

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Replying to Justin Bryant:
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By Tax Dragon
30th Jul 2020 09:58

Justin Bryant wrote:

We are obviously talking about the meaning of a building in the course of construction.

Are we? Work stopped over a year ago and no-one has said (in here) that it will recommence.

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Replying to Tax Dragon:
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By Justin Bryant
30th Jul 2020 10:01

How exactly does that affect HMRC's definition? Perhaps you need a dictionary too?

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Replying to Justin Bryant:
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By Tax Dragon
30th Jul 2020 10:10

Because (if you bothered to read "HMRC's 'definition'", you'd see it said things like:

HMRC wrote:
However, if construction or adaptation has begun at the EDT, then the planning permission would be a strong indicator of what the building is to be used for i.e. whether it should be treated as a residential or non-residential property.

The TEST relates to what the building IS TO BE USED FOR.

Go back and READ (if you can) 1) the OP and 2) my first post above.

Oh and 3) the statute (Wilson has even quoted it for you above, to save you looking it up) and 4) HMRC's "definition".

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Replying to Tax Dragon:
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By Justin Bryant
30th Jul 2020 10:14

All I can say to that (mystifyingly irrelevant comment) is that it's thanks to people like you 2 that this website is a shadow of what it once was!

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Replying to Justin Bryant:
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By Tax Dragon
30th Jul 2020 10:45

Justin Bryant wrote:

All I can say to that (mystifyingly irrelevant comment) is that it's thanks to people like you 2 that this website is a shadow of what it once was!

I think the mystifying, irrelevant comment section of this thread (was) started at 08.48 this morning. By Justin Bryant. The two comments prior to that were both cogent and relevant.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
30th Jul 2020 10:19

Let me try once more:

The OP said "HMRC's definition of a dwelling includes a property which is (or could be) used as a dwelling or is in the process of being constructed or adapted into a dwelling". Let me repeat - "HMRC's definition of a DWELLING" Not the definition of "in the course of construction etc". The latter is given meaning by HMRC, the former by statute.

Yes, the salient point is the meaning of "in the course of construction etc". But the fact remains that TD's initital reference was to the definition of a dwelling. The words used by the OP are those contained in statute. TD was therefore not wrong in pointing out that said definition is in statute and not HMRC's invention. The fact that you are unable to see this distinction simply illustrates why you get so much else wrong.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
30th Jul 2020 10:56

Justin Bryant wrote:

Your photo is very apt BTW (the SDLT advisor from hell).


I don’t advise on SDLT (“Just as well” I hear you say). But for a so-called specialist in the tax you do get some pretty basic stuff wrong (I’m not referring to the current discussion, which is just about your inability to read properly).
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Replying to Wilson Philips:
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By Tax Dragon
30th Jul 2020 11:04

Wilson Philips wrote:

I’m not referring to the current discussion, which is just about your inability to read properly.

Trying to take a step back, it could just be that legal types and tax types use the word "definition" differently. How we are trained does shape our use of language. If Justin's training, and therefore use of language, is different, it could explain this (ludicrous) sidestep into the definition-of-"definition" alley.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
30th Jul 2020 12:34

What seems to have befuddled Justin's mind (he is easily confused) is that the OP has basically used the statutory definition of residential property but used the word "dwelling" instead of "residential property". Whilst Justin may be correct in saying that the interpretation of "in the course of construction etc" is all of HMRC's making he was nevertheless wrong to accuse you of being wrong in putting the OP right on the definition of residential property (sic). I remain of the view that he owes you an apology but as we know with Justin "sorry" is most definitely the hardest word.

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Replying to Wilson Philips:
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By Tax Dragon
30th Jul 2020 12:48

You have explained it (several times now) magnificently.

(On checking the meaning of "explained", I find it's "made (an idea or situation) clear to someone...". Hm. Well, OK... you have laid out the position with great clarity. For anyone that cares to look. Whether it is then clear to them... depends on how well they can read, perhaps.)

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Replying to Tax Dragon:
Psycho
By Wilson Philips
30th Jul 2020 13:00

Tax Dragon wrote:

On checking the meaning of "explained"

Surely you mean "on checking the definition of ..."

Because Justin seems to think that the "meaning" in s116 is not the same as a definition.

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Replying to Wilson Philips:
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By Tax Dragon
30th Jul 2020 12:48

PS thank you for trying.

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Replying to Wilson Philips:
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By Tax Dragon
30th Jul 2020 13:02

PPS I owe Justin an apology for misreading (I know, I know, the irony) his post at 09.46. My eyes skipped over the words "the meaning of" (irony again!). Which is why my 09.58 reply (I now see) was a little bit skewy in context.

Sorry, Justin.

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