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image of scottish houses | accountingweb | LBTT - property occupied for 18 days did not qualify for main residence relief

Additional dwelling refund refused for 18-day stay


A taxpayer who lived in a Scottish property for just 18 days made themselves ineligible for main residence relief on the additional dwelling supplement because their intentions were clear.

12th Mar 2024
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A taxpayer was unable to recover the additional dwelling supplement incurred when he purchased a property in Scotland, as his short-stay intentions prevented the property from becoming his only or main residence.

On 12 July 2019, Alan Blue disposed of a solely owned residential property (property 1) and on 30 July 2019 he purchased another properly (property 2) in joint names with Patricia Miller. At that date, Miller also owned part of a third property (property 3); this was sold in July 2022.

During the 18 days between selling property 1 and acquiring property 2, Blue lived with Miller in property 3.

Additional dwelling supplement

For those unfamiliar with the Scottish tax system, land and buildings transaction tax (LBTT) is the equivalent of stamp duty land tax (SDLT), with additional dwelling supplement (ADS) being the additional amount due where the buyer owns two residential properties at the end of the day that is the effective date of the transaction.

The rules relating to ADS are contained within LBTTA 13 Sch 2A, with the repayment rules being covered in paragraph 8.

In brief, paragraph 8(1) states that a refund of ADS can be claimed where:

  1. an old dwelling is disposed of within 18 months of the purchase of the new dwelling that triggered the ADS charge
  2. the old dwelling was the buyer’s only or main residence at any point in the 18 months to the purchase of the new dwelling
  3. the new dwelling has been occupied as the buyer’s only or main residence.

Paragraph 8A then says where there are two buyers who are spouses, civil partners or co-habitants, (a) must be met by at least one buyer, but (b) and (c) must be met by both.

Despite its relevance here, the case does not mention that paragraph 8B then extends the time frame in para 8(1)(a) to 36 months for purchases between 24 September 2018 and 24 March 2020.

Payment and reclaim

A LBTT return was submitted showing £12,700 as due and, following the disposal of property 3, a claim for repayment of the ADS was made.

Revenue Scotland (RS) queried the refund claim and Blue, after some misunderstandings with his agent, confirmed to RS that he had lived in property 3 for the 18 days to the purchase of property 2, therefore meeting the condition in paragraph 8(1)(b).

However, due to his stay being a mere 18 days (and various other factors, such as property 1 having been sold to his son, who therefore passed on his post), Blue had not updated his address nor diverted his post, and Miller had not made any changes to the council tax record of property 3 (purportedly on the council’s advice). 

In lieu of this usual evidence, Blue collected seven signed letters, one of which was from his son, stating that Blue had moved into property 3 as stated. However, RS did not accept this to be sufficient evidence and so upheld its decision.

Blue appealed to the first tier tribunal (FTT).

Proof of occupation

As property 2 was jointly purchased by cohabitants, a refund would only be due if both Blue and Miller had occupied property 3 as their only or main residence at some point in the 18 months prior to the purchase of property 2.

The FTT had no doubt Miller met this test, but required Blue to supply some proof to support his claim.

Unlike RS, which had based its refusal on guidance, not legislation, the FTT was happy to accept the seven letters as evidence that Blue had actually occupied property 3 during the 18 days in question.

So Blue occupied the property, but was it his only or main residence?

Only or main residence

Blue had had unrestricted use of the property, parking his car on the drive, taking his meals there and moving some personal items into the property. 

However the FTT found that there was no intention by Blue to permanently occupy the property. Even ignoring his actual short stay, he had moved in knowing (or at least expecting) that he would only be there for a short time. This was supported by the fact he only brought items necessary for a short stay.

The FTT therefore found that the nature, length and circumstances of Blue’s stay at property 3 were not sufficient to make it his only or main residence during the 18 days. While acknowledging that Blue may find the law to be unfair, they dismissed his appeal and confirmed he was not due a repayment of the ADS paid.

Good intentions

Blue’s intentions were his undoing in this case, as while his actual stay at property 3 was of a “good quality”, the fact he never intended to remain there for any significant period of time prevented it becoming a main residence.

Replies (1)

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Donald MacKenzie
By Donald MacKenzie
13th Mar 2024 10:10

If Blue had moved directly from property 1 to property 2 and been joined, at some later point, by Miller this would have had a different outcome. His disposal of property 1 and purchase of property 2 show he did not have an additional dwelling.
Miller disposed of property 3 within the (extended) period allowed so again additional property charge would not have hit.
For once I am in sympathy with the taxpayer.

Thanks (1)