Was adjoining paddock part of the grounds of the house?

In 2017 the taxpayer bought a cottage with a garage garden and adjoining paddock. The paddock had formed part of a neighbouring farm but by the time of sale was owned by the seller. It was separated from the garden by a hedge and fencing. In the past it had been used for grazing but this was not the case at the time of acquisition. 

HMRC considered the paddock to be part of the grounds of the residential property (FA 2003 s 116(1)(b)). The taxpayer claimed it was separate and did not form part of the residential property.

The First-tier Tribunal said the paddock had clearly not always been part of the property although by the land transaction in issue it and the cottage had come under common ownership. The fact that the paddock was sold with the cottage was not on its own...