Cart Lodge Annex “Suitable for Use as Single Dwelling” Despite Physical Limitations following Smith & Anor v HMRC

In a recent decision, the First-tier Tribunal (FTT) provided important clarification on the meaning of “suitable for use as a single dwelling” when the Appellant sought to claim Multiple Dwellings Relief (MDR) under the Stamp Duty Land Tax (SDLT) regime. The case concerned whether a cart lodge annex, despite its physical limitations, met the statutory criteria for suitability under Paragraph 7 Schedule 6B of Finance Act 2003.

The FTT allowed the appeal, applying the multi-factorial test established in Fiander v HMRC. It held that HMRC’s objection on several features including, low sloping ceilings, access to the upper level via a ladder-style staircase without handrails, reliance on the main house’s hot water supply, and entry through a shared carport did not render the annex objectively unsuitable for residential use. Instead, the FTT was satisfied that the annex provided an adequate degree of privacy, security, and self-sufficiency consistent with the concept of a single dwelling.

Specifically, in regard to the lack of independent utilities and access, the FTT rejected the contention that shared arrangements were incompatible with independent occupation, noting that similar dependencies are common in landlord-tenant or sub-letting arrangements.

Moreover, the lack of handrail, the absence of a formal arrangement for independent utility access, or the lack of a fire certificate as at the effective date were not considered to be a defining feature of suitability. The FTT noted “small tweaks and adjustments can always be made to ensure and improve the safety and comfort of particular occupants without calling into question a property's suitability for use as a single dwelling.”

In conclusion, the FTT emphasized that the test is not “one size fits all”. No single factor outweighs another, and each must be assessed in light of the specific facts and context of the case. The ultimate question that must considered is whether the accommodation meets the basic living needs of those who might reasonably choose to live there.

Read the full decision of Steven James Harvey Smith & Anor v. HMRC [2025] UKFTT 752 (TC) here.