The Berrell Case: FTT Permits MDR despite Shared Hallway Access

A recent decision of the First-tier Tribunal (FTT) in Berrell & Anor v Revenue and Customs [2025] UKFTT 1067 (TC) has allowed an appeal concerning whether a property comprising a main house and annexe can qualify as two separate self-contained dwellings for Multiple Dwellings Relief (MDR) purposes under Schedule 6B of the Finance Act 2003 (the “Act”), despite both units sharing a rear hallway with contested privacy and security arrangements.

The appellants purchased a residential property, initially paying SDLT without claiming MDR. The property consisted of a main house and a converted garage annexe containing a studio room suitable as bedroom/living space, shower room with toilet, and utility room with cooking facilities. Both units were accessed through a communal front porch but shared a rear hallway connecting the main house kitchen, the annexe utility room, and the rear garden. The hallway doors presented privacy and security concerns as the utility door had only a one-way bolt lockable from inside the annexe, whilst the kitchen door featured partially frosted glass panels and a two-way lock. The appellants later submitted an amended SDLT return claiming MDR, which HMRC subsequently refused. HMRC contended that the shared hallway arrangement compromised privacy and security requirements, rendering the properties unsuitable for occupation by unrelated third parties.

The central issue before the FTT was whether the main house and annexe constituted two separate units, each being “suitable for use as a single dwelling” under paragraph 7(2)(a) of Schedule 6B of the Act.

The FTT held that it was necessary to consider realistic occupancy terms when assessing suitability, and therefore rejected HMRC's argument that only the property’s physical state at completion was relevant. Applying Fiander's principles requiring "a degree of privacy, self-sufficiency and security", the FTT found the properties satisfied the dwelling test despite imperfect hallway arrangements. Positive factors included a studio room suitable for sleeping and living, a separate shower and toilet, utilities for cooking and washing, a separate lockable front door via a communal porch, independent electrical heating, a separate fuse box and stop tap, and access to running water and mains electricity, albeit through a communal porch, independent electrical heating, separate fuse box and stop tap, and running water and mains electricity. Whilst acknowledging the hallway presented practical difficulties, the FTT determined these could be managed through treating it as communal space with exclusive garden access for the main house.  

The appeal succeeded on the basis that numerous strong factors outweighed the hallway complications in the overall multi-factorial assessment.

Read the full decision of Berrell & Anor v Revenue and Customs [2025] UKFTT 1067 (TC).