Relevance of planning condition

The taxpayers bought a property which included an annexe and submitted a stamp duty land tax (SDLT) return on the basis it was residential. They later amended the return asserting that multiple dwellings relief (MDR) was due on the grounds that the annexe was a separate dwelling to the main house.

After an enquiry HMRC concluded that MDR was not due. The taxpayers appealed.

The annexe was marketed as a ‘self-contained one-bedroomed annexe’ with its own kitchen living room bedroom and bathroom. It had a separate front door but was also connected to the main house through a lockable door. The main house and annexe share electricity and gas meters and receive a single utility bill but were separately rated for council tax.

When planning permission was granted for the annexe it included a condition that the annexe had to be ancillary to...