Temporary Residence Insufficient for ADS Reclaim: FTT Clarifies ‘Only or Main Residence’

This case, before the First-tier Tribunal (FTT), clarifies that a place of residence must constitute elements of permanence and continuity to qualify as an “only or main residence” for Additional Dwelling Supplement (ADS) repayment purposes.

Under Land and Buildings Transaction Tax (LBTT), a devolved tax on land transactions in Scotland, ADS is a surcharge applied on the purchase of an additional new residential property. However, buyers who dispose of their previous main residence may reclaim the ADS paid on the purchase of their new main residence, provided the statutory conditions under Paragraph 8(1) of Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013 are met. One condition being that the disposed dwelling must have been the “only or main residence” of all buyers at some point during the 18-month period (now 36 months for transactions after 1 April 2024) ending on the date before the new main residence is purchased.

In the present case, the appellant and his partner jointly purchased their new main residence. Subsequently, following the sale of the property that had previously served as the partner’s main residence, the appellant submitted a claim for repayment of the ADS paid on the new purchase. This was on the basis that he had stayed at the partner’s previous main residence for 18 days, during which it was his “only or main residence”. However, Revenue Scotland rejected this position, and hence the matter was subsequently brought before the FTT.

The FTT acknowledged the appellant’s stay to be his home during that period but found it to be only a "stop-gap arrangement", before purchasing the new property. It highlighted that "home" and "residence" are not interchangeable, and the legislation must be applied as enacted by Scottish Parliament, not by a "layman's broader understanding." Critically, the appellant had intended to stay for less than three weeks and brought only essential possessions. This temporary nature distinguished his case from others where short-term occupation qualified as residence based on the "quality" of occupation.             

In reaching its decision, FTT relied on established case law, particularly from Simpson v HMRC [2019] UKFTT 704 (TC), Goodwin v Curtis (1998) 70 TC 478, and Fox v Stirk [1970] 2 QB 463, which stress that residence requires "some degree of permanence, some degree of continuity, some expectation of continuity." It also noted that ADS repayment provisions are "tightly drawn" with limited exemptions, and courts have no authority to extend these circumstances beyond those clearly set out by Parliament.

Read the full decision of Alan Blue v. Revenue Scotland [2023] FTSTC  here.