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April 8

2019
by Millie Wickens
HMRC £7,500 derelict bungalow stamp duty claim rejected

A judge has thrown out a £7,500 stamp duty claim from HMRC because the derelict bungalow was not in a state to live in when purchased.

The home was bought by Paul and Nikki Bewley who planned to demolish the £200,000 bungalow in Weston super Mare, near Bristol, to build a new home on the plot.

But HM Revenue and Customs argued that a home is always somewhere to live regardless of the state of repair and upped the stamp duty bill from £1,500 to £7,500.

The increase came from charging the Bewleys an additional rate for buying a residential property while they already had a main home.

The couple refused to pay, pointing out that surveyors had stated the bungalow was dilapidated, had asbestos issues, and that the heating system, pipes and boiler had been ripped out.

HMRC did not agree, so the Bewleys appealed the stamp duty assessment to the First Tier Tribunal.

HMRC argued that the bungalow was a home and as they already owned a main residence, the purchase triggered an additional amount of stamp duty when they bought the property regardless of the state of repair.

Presiding, Judge Richard Haarer said this point was not relevant and the stamp duty test was only applicable if the property was a home at the time of purchase, not in the future.

“The purchase of the land and building by the appellant, given our decision that the building was not suitable to be used as a dwelling and the fact that it was not so used at the time of purchase, means that it was non-residential,” he said.

The judge explained that, as the property was not suitable to live in on purchase, non-residential stamp duty rates should apply. He upheld the appeal and reduced the assessment to £1,000.

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