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Analyzing D.K. Sexton & E.R. Sexton’s Non-Residential Garden & Grounds

Published by UK Property Accountants
Posted Date: August 14, 2023 , Modified Date: April 17, 2024
Categories: Case Law, MDR

Stamp Duty Land Tax (SDLT) is a crucial aspect of property transactions in the United Kingdom, and the classification of properties as residential or non-residential plays a significant role in determining the applicable tax rates. In the recent case of Danielle Katie Sexton and Emma Rachel Sexton, the classification of a property as residential for SDLT purposes became a dispute.

This article delves into the matter and analyses its implications for taxpayers and tax authorities.

Background of The Case

In the case of Danielle Katie Sexton and Emma Rachel Sexton, the taxpayers jointly acquired a flat in London and subsequently claimed an overpayment relief on SDLT. They contended that the property had been erroneously classified as residential, seeking to have it classified as non-residential instead.

Background of the Case

HM Revenue and Customs (HMRC) denied their claim, maintaining that the property was correctly classified as residential. As a result, the taxpayers appealed against the closure notice issued by HMRC, leading to a legal dispute.

Central Arguments

The primary point of contention in the Sexton case revolved around an easement granted to the taxpayers, which allowed them access to a communal garden. The taxpayers argued that this easement constituted a non-residential right, thereby influencing the classification of the property for SDLT purposes.

Their argument was based on the easement's communal nature, asserting that it did not exclusively pertain to their dwelling. Additionally, they contended that the easement related to the bare land of the communal garden rather than the specific property itself.

On the other hand, HMRC argued that the main focus of the transaction was the acquisition of the flat itself. According to HMRC, the easement constituted a right appurtenant to the property and did not alter its residential classification.

Tribunal's Analysis and Decision

The First-tier Tribunal thoroughly examined the relevant legislation, particularly Section 55 of the Finance Act 2003, which determines SDLT rates based on property classification. The interpretation of "main subject matter" within Section 43(6) and its implications for transactional understanding was critical.

Ultimately, the Tribunal ruled favour of HMRC and dismissed the taxpayers' appeal. The Tribunal concluded that the primary subject matter of the transaction was about the flat, and the easement, being an integral part of the leasehold interest acquisition, was considered appurtenant to the property. Therefore, the easement did not impact the residential classification of the property for SDLT purposes.

Tribunal's Analysis and Decision

The Tribunal rejected the taxpayer's argument that the easement should be considered non-residential due to its communal nature. They emphasized that the easement exclusively benefited the flat, augmenting its value and desirability.

 As a result, the easement fell within Section 116(1)(c) of the Finance Act 2003 as an interest in land subsisting for the benefit of the building.

Implications and Lessons Learned

The Sexton case carries several important implications for taxpayers and tax authorities:

Proper Classification

The case underscores the significance of accurately classifying properties for SDLT purposes. It highlights the need to distinguish between the main subject matter of a transaction and ancillary rights or interests.

Appurtenant Rights

When an interest or right is appurtenant to the principal chargeable interest, it becomes subsumed within that interest. This ruling emphasizes the importance of recognizing certain rights' inseparability from the transaction's primary subject matter.

implications for taxpayers and tax authorities

Communal Rights and Residential Classification

The case clarifies that communal rights, such as easements, can still be considered residential if they primarily benefit a specific dwelling. The communal nature of an easement does not automatically make it non-residential as long as it exclusively helps individual dwellings.

Compliance and Planning

Understanding the complexities of SDLT classifications is crucial for taxpayers to ensure compliance and avoid potential overpayment or underpayment of taxes. Consulting with tax professionals and seeking guidance from HMRC can help taxpayers make informed decisions.


The Danielle Katie Sexton and Emma Rachel Sexton SDLT case serves as an important precedent for property transactions and SDLT classification. It highlights the need for taxpayers to understand the intricacies of SDLT legislation, particularly regarding property classification, appurtenant rights, and communal rights.

By staying informed and seeking professional advice, taxpayers can navigate SDLT regulations effectively and ensure compliance with the law.

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