VAT Director Rayner Essex
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SDLT: Use and abuse of multiple dwellings relief

Multiple dwellings relief (MDR) may be suggested to some buyers as a means of saving Stamp Duty Land Tax (SDLT), but the application of the law is somewhat subjective and buyers continue to push the boundaries.

27th Aug 2020
VAT Director Rayner Essex
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Elizabethan Manor house in the Cotswolds, Oxfordshire, England

In simple terms, MDR applies when purchasing more than one residential property in a single transaction and allows the buyer to take the average value of the multiple purchases when calculating the stamp duty land tax (SDLT) due. 

SDLT MDR example

MDR arguments 

The temptation, therefore, is for someone buying a dwelling to argue more than one dwelling is being purchased in order to tap into MDR. This is amplified when the dwelling has a substantial purchase price.

The tax tribunals have seen some recent cases where the concept of MDR is perhaps being pushed too far:

  1. In Merchant and Gater (TC07783), a house buyer argued the basement in their £1.92m dwelling was a separate dwelling. But the basement had no separate entrance or exit, had shared utilities with the main house, and did not exist as a separate dwelling on the land registry or council tax records.
  2. In Fiander and Brower (TC07783), the buyers purchased a property advertised as a three-bedroomed detached house but argued there was a main house and an annexe linked by a corridor. However, the corridor gave open access to the main house, and the annex did not exist on the land registry or council records as a separate dwelling. It also shared some services.  

The FTT took a view of an objective observer and concluded that whilst the annexe could be seen as a separate dwelling, it would really only work if the occupier was family or related and therefore not truly a separate dwelling. 

If we apply that logic to the Merchant case, as the services and entrances are shared, it really only works if the basement is occupied by family member. This is different to, say, a granny flat in the garden which is not dependent upon the main property and so could be occupied by anyone, not just a granny.

In both cases, the marketing materials advertised the property as a single dwelling. That is the first point to consider, other clues include only having one council tax bill, shared utilities, etc.  

MDR success

There is no checklist to tick off to achieve MDR success or a basket of evidence that will pass the test.

Each case should be considered on its own merits. For every farmhouse with a cottage for workers, there will be a garage converted into a “dwelling” for an elderly relative and things are not always so clear cut. Even if the facts on the ground appear compelling, the estate agent advertisement might bring the house (and its associated annexe or separate dwelling) crashing down.

Advice is key 

As with any tax, it is best to get SDLT advice and the tax liability correct right at the time the tax is due, and sense check by being an objective observer. 

Look to see if MDR can apply to your transaction, if it does then it can potentially save you money, but MDR must applied with care and caution.

Replies (3)

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By Justin Bryant
27th Aug 2020 13:47

The Merchant and Fiander cases are more or less chalk & cheese as the former was a clear try-on by an unregulated MDR claims firm who aren't even general SDLT specialists (or proper tax advisors), yet Fiander was very much an arguable MDR case and is being appealed to the UT.

As for care & caution, what was the downside for the above unsuccessful try-on? Little if anything if the fees were refunded (at most bit of interest on over refunded SDLT ).

Advisors will be more concerned about potentially being sued for overlooking such claims.

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Replying to Justin Bryant:
By aiwalters
15th Oct 2020 13:53

sorry- I replied to the wrong comment, and I can't see how to delete. Ignore.

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By aiwalters
15th Oct 2020 13:52


However, the corridor gave open access to the main house, and the annex did not exist on the land registry or council records as a separate dwelling. It also shared some services. .

This is very misleading. The FTT gave very little weight to the council records and services. The test was found to be based on whether the property is physically suitable as a separate property, thus the first point regarding the corridor was valid, but the second, not.

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