Expensive purchase

Higher rate relief on purchase of property to convert to care home

The taxpayer provided specialist residential and care services for adults with learning disabilities and mental health needs. It completed the purchase of a five-bedroomed house in February 2015 and filed an electronic stamp duty land tax return. It had previously obtained planning consent for alterations and change of use to a care home. HMRC decided that the 15% rate applied.

The taxpayer appealed claiming the exemption in FA 2003 Sch 4A para 5B on the basis that the dwelling would be available to the public in the course of a qualifying trade.

At the First-tier Tribunal the taxpayer said the higher rate was introduced to counter tax avoidance through ownership of high-value residential property by companies. It was not intended that genuine businesses would be subject to the 15% rate. Care homes were ‘just as...