Acquisition of property is residential

The taxpayers bought a flat in London. The leasehold interest also conferred on the taxpayers rights over a communal garden (the easement) – in effect they had access to the garden as long as they paid the ‘garden rate’ and kept it neat and tidy.

They later applied for stamp duty land tax overpayment relief on the ground the property had been misclassified as residential. HMRC refused the claim.

The taxpayers’ counsel argued that the right to use the garden was not residential in nature so that under FA 2003 s 55(1B) the rates in table B (non-residential or mixed) applied. Counsel said because the gardens were used ‘in common’ with the other owners of properties the right did not subsist solely for the benefit of the taxpayers’ flat. To be residential in nature the right had to subsist for the benefit only of the dwelling in...