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T & Z Suterwalla v HMRC: Residential and Non-Residential Property for SDLT

Published by UK Property Accountants
Published Date: August 14, 2023

This article explores a recent appeal case involving Mr Taher Suterwalla and Mrs Zahra Sutterwalla (referred to as the Appellants) against a closure notice issued by HMRC under paragraph 23, Schedule 10 Finance Act 2003 (FA 2003) on 8 November 2021.

The closure notice increased the Stamp Duty Land Tax (SDLT) liability on their acquisition of Woodlands House, Harpsden Woods, Harpsden, Henley on Thames RG9 4AE (referred to as the Property) on 11 December 2020.

The Appellants contested the closure notice, claiming that the Property consisted of residential and non-residential land. 

This article overviews the background, points at issue, relevant laws, case law, and evidence presented in the appeal case and concludes with the tribunal's decision.


On 11 December 2020, the Appellants acquired the Property and filed an SDLT return treating it as residential and non-residential mixed-use.

Property and filed an SDLT return treating file for Residential and Non Residential Property

HMRC opened an enquiry into the return on 19 August 2021 and issued a closure notice on 8 November 2021, amending the SDLT return to charge SDLT at the residential rate.

The Appellants appealed the closure notice on 23 November 2021, which led to a statutory review and subsequent appeal to the tribunal.

Points at Issue

The primary issue in this case was whether the Property acquired by the Appellants constituted land consisting entirely of residential Property or included non-residential Property.

The burden of proof fell on the Appellants to demonstrate that the closure notice had overcharged them.

The Law

This section provides an overview of the relevant laws governing SDLT. Section 42 of FA 2003 states that SDLT is charged on land transactions, and section 116(1) defines residential Property as a building suitable for use as a dwelling, along with its surrounding land or garden.

Non-residential Property, on the other hand, refers to any property that is not residential. The amount of tax chargeable for a transaction depends on whether the land consists entirely of residential Property or includes non-residential Property.

Case Law on Behalf of The Appellants

 The Appellants' legal representatives presented various case law examples to support their argument that the paddock should not be considered part of the Residential Property. These cases included Hymen and Goodfellow v HMRC [2022] EWCA Civ 185, Sloss v Revenue Scotland [2021] FTSTC 1, and Withers v HMRC [2022] UKFTT 00433 (TC).

These cases emphasized factors such as functional relationship, use or function of adjoining land, and extent of land when determining whether it should be classified as part of the grounds of a dwelling.

Evidence from Mr T Suterwalla Mr T Suterwalla provided witness statements and oral evidence to support his claim. He explained that the paddock was not visible from the dwelling house and had never used it personally.

The Appellants had leased the paddock for grazing purposes, which he considered a commercial arrangement providing financial benefits and relieving him of maintenance responsibilities.

The Grazing Lease

 The Appellants granted a grazing lease for the paddock to Ms Pragnell, allowing her to graze up to two horses for her private purposes.

The Grazing Lease for SDLT

This lease was entered into on the same day as the completion of the property purchase.

The Appellants argued that the grazing lease, being a separate transaction, did not affect the classification of the paddock as non-residential Property.

HMRC's Case

HMRC argued that the entire Property should be classified as residential, relying on the Property's registration in a single title and the claim that it was sold as an equestrian property.

They also emphasized the privacy and country setting of the gardens and grounds.


The tribunal considered the evidence and arguments presented by both parties. After examining the relevant factors and case law, the tribunal concluded that the paddock should not be considered part of the Residential Property.

The factors supporting this decision included the lack of visibility from the dwelling house, the commercial nature of the grazing lease, the separate title registration, and the Appellants' intention to exclude the paddock if possible.

Therefore, the tribunal allowed the appeal, stating that HMRC should not have issued the closure notice seeking additional SDLT.


This comprehensive guide to SDLT provides an overview of a specific appeal case, highlighting the background, points at issue, relevant laws, case law, evidence, and the tribunal's decision.

It serves as a resource for understanding the complexities of SDLT and the factors considered when determining the classification of land as residential or non-residential for tax purposes.

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