Entire property including paddock was residential

The taxpayers bought a converted barn and paid stamp duty land tax at the mixed use rate on the basis that a paddock - which was included with the property - was used for commercial purposes.

HMRC disagreed and said the entire property was residential. The residential rate of SDLT therefore applied.

The taxpayers appealed.

The First-tier Tribunal concluded that although there was a grazing agreement in place at the date of completion this was not enough to take the paddock outside the definition of grounds. Among the reasons that led the tribunal to this conclusion was that the total area of the property was about three acres of which the paddock formed about 1.5. This was ‘consistent and proportionate’ to the size of the house and garden. There was also easy access from the garden to paddock. In addition while the land registry showed there were two...