Residential SDLT Classification of Commercially Licensed Field

In Lazaridis v HMRC, the First-tier Tribunal (FTT) clarified that formal commercial arrangements over a property do not automatically prevent it from constituting "grounds" of a dwelling for Stamp Duty Land Tax (SDLT) purposes where its ultimate use supports the residential character of the property.

This is an appeal by Mr. Lazaridis against HMRC’s decision that he owed an additional SDLT of £1.2 million on the purchase of a property spanning approximately 106 acres. The dispute concerns whether 40 acres, part of the total area of the field and subject to a mowing licence generating £1,400 annually, forms part of the "grounds" of the dwelling for SDLT purposes. This determination is crucial as a finding that the fields formed part of the "grounds" of the dwelling would subject the transaction to residential rates of SDLT, rather than his contention for mixed-use rates.

The FTT dismissed the appeal, holding the entire property to be residential. Applying a multifactorial evaluation, FTT found the main benefit to the landowner was not the licence fee, but that the fields were well-maintained, which was consistent with them being part of the grounds. Key factors in its evaluation included long-standing common ownership of the house and field, proximity and visibility of the fields from the house, limited economic significance of the commercial agreement, its contribution to the property's peace and rural character, and its proportionate size representing only 40% of the total property. Additionally, the Fields were described in the sales brochure under the heading of “Gardens and Grounds”.

Referring to Harjono v HMRC [2024] UKFTT 228 (TC), the FTT focused on the "ultimate use" of the fields as keeping the grounds well maintained rather than the "intermediate use" of formal licensing.

Read the full decision of Mike Lazaridis v. HMRC [2024] UKFTT 00925 (TC) here.