“The amount of tax chargeable in respect of a chargeable transaction to which this section applies is determined in accordance with subsections (1B) and (1C).”
“the land an interest in which is the main subject-matter of the transaction.”
“References in this Part to the subject-matter of a land transaction are to the chargeable interest acquired (the ‘main subject matter’), together with any interest or right appurtenant or pertaining to it that is acquired with it.”
“Meaning of “residential property” (1) In this Part “residential property” means – (a) a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, and (b) land that is all forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land), or (c) an interest in or over land that subsist for the benefit of a building within paragraph (a) or of land within paragraph (b) and “non-residential property” means any property that is not residential property.” (a) a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, and (b) land that is all forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land), or (c) an interest in or over land that subsist for the benefit of a building within paragraph (a) or of land within paragraph (b) and “non-residential property” means any property that is not residential property.”
“gardens and grounds with lakes and pasture, about 50 acres and 100 acres of land and cottage available for separate negotiation.”
“22. An enquiry, begun by way of an enquiry notice, is concluded by a closure notice. The closure notice comprises two elements: (1) A statement of the officer’s conclusions; and (2) A statement of what, if anything, must be done to give effect to those conclusions. 23. The whole point of tax returns and enquiries into them is to ensure that the public interest in taxpayers paying the correct amount of tax is met. To that end, HMRC must have an appropriate ability to examine the return, but the taxpayer must have a fair opportunity to challenge (by way of appeal) either (i) the conclusions of HMRC or (ii) the manner in which those conclusions have been given effect to (by way of amendments to the return) ... 24. It is important to appreciate that the conclusions of a closure notice are distinct from the amendments that may arise out of those conclusions. Obviously, there is a nexus between the two – the amendments implement the conclusions reached – but they are very different things. The conclusions in a closure notice consist of a statement why the taxpayer’s return is incorrect (if it is), whereas the amendments set out how the return must be corrected in order to give effect to those conclusions. A closure notice must state the officer’s conclusions; and having issued a closure notice, HMRC has no power to amend the relevant return other than to give effect to the conclusions: Bristol & West at [24]; Investec at [51].”
“(5) It is desirable that the statement by the officer of his conclusions should be as informative as possible: Tower MCashback at [83]; Fidex at [42]. Furthermore, notices are given at the conclusion of an enquiry, and must be read in context. It will be rare for a notice to be sent without some previous indication during the enquiry of the points that have attracted the officer’s attention: Tower MCashback at [84]; Fidex at [42], [45]; Lavery at [37]. That said, a narrowly drawn closure notice – properly construed – cannot be widened by reference to the scope of the enquiry which preceded it: Lavery at [34]. (6) It is not appropriate to construe a closure notice as if it were a statute: Fidex at [51]; Lavery at [28]. The ordinary rules of construction apply to closure notices, and the question of construction is a mixed question of fact and law: the identification of the relevant circumstances and context in which the document is to be construed is a question of fact, whilst the meaning of the document – construed within that context, as found – is a question of law: Lavery at [36]. Essentially, when approaching the question of construction, it is appropriate to consider how the reasonable recipient of the notice, standing in the shoes of the taxpayer, would have construed it: Lavery at [42].”
“…we must bear in mind that it is perfectly possible for the consequential adjustment in a closure notice itself to be in error, in that it fails to articulate the adjustment required by the conclusion articulated by the officer.”
“45. In my judgment the principles to be applied are those set out by Henderson J as approved by and elaborated upon by the Supreme Court. So far as material to this appeal, they may be summarised in the following propositions: (i) The scope and subject matter of an appeal are defined by the conclusions stated in the closure notice and by the amendments required to give effect to those conclusions. (ii) What matters are the conclusions set out in the closure notice, not the process of reasoning by which HMRC reached those conclusions. (iii) The closure notice must be read in context in order properly to understand its meaning. (iv) Subject always to the requirements of fairness and proper case management, HMRC can advance new arguments before the FTT to support the conclusions set out in the closure notice.”
“(1) In this Part “residential property” means – (a) a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, and (b) land that is all forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land), or (c) an interest in or over land that subsist for the benefit of a building within paragraph (a) or of land within paragraph (b) and “non-residential property” means any property that is not residential property.” (a) a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, and (b) land that is all forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land), or (c) an interest in or over land that subsist for the benefit of a building within paragraph (a) or of land within paragraph (b) and “non-residential property” means any property that is not residential property.”
“2. a place of residence; a habitation, a house.”
“30. The modern approach to statutory interpretation was conveniently summarised by Lewison LJ in Pollen Estate Trustee Co Ltd v HMRC[2013] EWCA Civ 753 ;[2013] STC 1479 at [24]: “24. The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose…” “24. The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose…”
“The starting point must be that “dwelling house” …is an ordinary word in the English language. While I accept that dictionaries cannot solve issues of interpretation, it nevertheless is helpful to bear in mind that dwelling house has for centuries been a word of wide import. ... In ordinary parlance a bed-sitting room where somebody habitually stays is therefore capable of being described as a dwelling house. So much for generalities. The setting in which the word appears in the statue is important. It is used in legislation which is intended to afford a measure of protection to tenants under assured tenancies. This context makes it inappropriate for the court to place restrictive glosses on the word “dwelling”
“Dwelling” is not a term of art, but a familiar word in the English-language which in my judgement in this context connotes a place where one lives, regarding and treating it as home. Such a place does not cease to be a “dwelling” merely because one takes all or some of one’s meals out; or brings takeaway food in to the exclusion of home cooking; or at times prepare some food for consumption in heating devices falling short of a full cooking facility.”
“In both ordinary and literary usage, residential accommodation is "a dwelling" if it is the occupier's home (or one of his homes). It is the place where he lives and to which he returns and which forms the centre of his existence.”
“They [i.e. “dwell” and “dwelling”] suggest a greater degree of settled occupation than “reside” and “residence”, connoting the place where the occupier habitually sleeps and usually eats, ... In both ordinary and literary usage, residential accommodation is a “dwelling” if it is the occupier’s home (or one of his homes). It is the place where he lives and to which he returns and which forms the centre of his existence.”
“in our judgement a dwelling will, as a minimum, contain facilities for personal hygiene, the consumption of food and drink, the storage of personal belongings, and a place for the individual to rest and sleep.”
“very much essential to its character, to protect its privacy, peace and sense of space, and to enable the enjoyment of typical country pursuits.”
“30. Section 116(1)(b) refers to 'the garden or grounds of a building' and this is a reference to a building within s 116(1)(a). For present purposes, we can summarise the type of building which comes within s 116(1)(a) as a 'dwelling'. So s 116(1)(b) refers to the garden or grounds of a dwelling. 31. 'Garden' and 'grounds' are ordinary English words. In some cases, it might be helpful to refer to the dictionary definitions of 'garden' or 'grounds' to assist in defining the concept involved. We were not referred to any dictionaries at the hearing of these appeals because it was not suggested that there was any dictionary definition which supported the idea that a piece of land could only be the garden or the grounds of a dwelling if the piece of land was needed for the reasonable enjoyment of the dwelling. … 33. Section 116(1)(b) refers to a garden or grounds 'of' a dwelling. The word 'of' shows that there must be a connection between the garden or grounds and the dwelling. The section does not spell out what criteria are to be applied for the purpose of establishing the necessary connection. We note that FA 2003, in a separate definition of 'dwelling' for a specific purpose, refers to 'land occupied and enjoyed with the dwelling as its garden or grounds':.. We were not addressed as to whether the word 'of' is to be interpreted as involving the same degree of connection between the dwelling and the garden or grounds or a different degree of connection. Again, it is not necessary for us to deal with that point to deal with the sole issue raised in these appeals. … 38… there is no wording in section 116(1)(b) which imposes, or even hints at, a requirement that land can only be a garden or grounds of a dwelling if the land is needed for the reasonable enjoyment of the dwelling. We consider that in the absence of any wording to give effect to the limitation contended for, there is no such limitation on the operation of the provision.”
“49 …Given that 'garden' or 'grounds' are ordinary English words which have to be applied to different sets of facts, an approach which involves identifying the relevant factors or considerations and balancing them when they do not all point in the same direction is an entirely conventional way of carrying out the evaluation which is called for.”
“Neither the Upper Tribunal nor the Court of Appeal in Hyman attempted to give a definition of the word "grounds". Therefore, as the Upper Tribunal held, the correct approach to determining whether land forms part of the "grounds" of a property involves looking at all the relevant facts and circumstances and weighing up the competing factors and considerations, where they point in different directions, in order to reach a conclusion. This is, essentially, an evaluative exercise.”
“In considering this question, it is important not to divorce from its context the reference by Judge McKeever in Hyman FTT to land ‘being available to the owners to use as they wish’ … The judge was there explaining what she meant by grounds being land which is ‘occupied by the house’, and formed part of her statement, with which we agree, that use need not be active, and nor was it necessary for grounds to be used for ornamental or recreational purposes. Importantly, in that passage Judge McKeever went on to state that it was not fatal that other people might have rights over the land and that ‘a right of way over grounds might impinge on the owners’ enjoyment of the grounds and even impose burdensome obligations on them, but such rights do not make the grounds any the less the grounds of that person’s residence’. Again, we endorse that statement. This approach is in our view consistent with the conclusion in Hyman that it is not necessary for garden or grounds to be needed for the reasonable enjoyment of a dwelling. Since binding authority now establishes that ‘grounds’ are not confined to land necessary for the reasonable enjoyment of a dwelling, it is in our view consistent that third parties may have rights over the grounds or use the grounds, for example under planning or environmental law, without them ceasing to be grounds of the dwelling. Whether or not the land is used for a commercial purpose, which is clearly a relevant factor, is a separate question.”
“(1) “Grounds” is an ordinary (albeit a little archaic, at least in the view of some of my fellow judges) English word which has to be applied to different sets of facts. So, in deciding whether a particular piece of land comprises all or part of the “grounds” of a dwelling, it is necessary to adopt an approach which involves identifying the factors relevant in that case and balancing them when they do not all point in the same direction. (2) The discussion in HMRC’s SDLT Manual is a fair and balanced starting point for this exercise, but each case needs to be considered separately in the light of its own factors and the weight to be attached to them. Listing them briefly, the factors addressed in the SDLT Manual are: historic and future use; layout; proximity to the dwelling; extent; legal factors/constraints. (3) Section 116(1)(b) refers to a garden or grounds “of” a dwelling. The word “of” shows that there must be a connection between the garden or grounds and the dwelling. (4) Common ownership is a necessary condition for adjacent land to become part of the grounds of the dwelling, but it is clearly not a sufficient one. (5) Contiguity is important; grounds should be adjacent to or surround the dwelling; Hyman. (6) One requirement (in addition to common ownership) might be thought to be that the use or function of the adjoining land must be to support the use of the building concerned as a dwelling (Myles-Till). That may be putting the test too high to the extent it suggests that unused land cannot form part of the “grounds” of a dwelling (cp Hyman in the FTT at [62]). Such a requirement must also contend with the decision of the Court of Appeal in Hyman and Goodfellow that it is not necessary, in order for garden or grounds to count as residential property, they must be needed for the reasonable enjoyment of the dwelling having regard to its size and nature. (7) In that light, the “functionality” requirement might perhaps be put the other way round: adjoining land in common ownership will not form part of the “grounds” of a dwelling if it is used (Hyman in the FTT at [62]) or occupied (Withers at [158]) for a purpose separate from and unconnected with the dwelling. That purpose need not be (although it commonly will be) commercial (Withers). …”
“At one end of the spectrum, rights of way will generally not have this effect, even when the right is used for a commercial purpose and the existence and exercise of those rights is unconnected with the dwelling. At the other end of the spectrum, the use of a large, defined tract of land (which had historically been in separate ownership) for agricultural purposes by a third party who has rights enabling them to use that land in that way will result in that area of land not forming part of the grounds of a dwelling.”
“(1) Grounds is an ordinary English word. (2) HMRC’s SDLT manual is a fair and balanced starting point (considering historic and future use, layout, proximity to the dwelling, extent, and legal factors/constraints). (3) Each case must be considered separately in the light of its own factors and the weight which should be attached to those factors in the particular case. (4) There must be a connection between the garden or grounds and the dwelling. (5) Common ownership is a necessary condition, but not a sufficient one. (6) Contiguity is important, grounds should be adjacent to or surround the dwelling. (7) It is not necessary that the garden or grounds be needed for ‘reasonable enjoyment’ of the dwelling having regard to its size and nature. (8) Land will not form part of the ‘grounds’ of a dwelling if it is used or occupied for a purpose separate from and unconnected with the dwelling. (9) Other people having rights over the land does not necessarily stop the land constituting grounds. This is so even where the rights of others impinge on the owners’ enjoyment of the grounds and even where those rights impose burdensome obligations on the owner. (10) Some level of intrusion onto (or alternative use of) an area of land will be tolerated before the land in question no longer forms part of the grounds of a dwelling. There is a spectrum of intrusion/use ranging from rights of way (still generally grounds) to the use of a large tract of land, historically in separate ownership used by a third party for agricultural purposes under legal rights to do so (not generally grounds). (11) Accessibility is a relevant factor, but it is not necessary that the land be accessible from the dwelling. Land can be inaccessible and there is no requirement for land to be easily traversable or walkable. (12) Privacy and security are relevant factors. (13) The completion of the initial return by the solicitor on the basis the transaction was for residential property is irrelevant. (14) The land may perform a passive as well as an active function and still remain grounds. (15) A right of way may impinge an owner’s enjoyment of the grounds or even impose burdensome obligations, but such rights do not make the grounds any less the grounds of that person’s residence. (16) Land does not cease to be residential property, merely because the occupier of a dwelling could do without it.”
“Land would not constitute grounds to the extent that it is used for a separate, e.g. commercial purpose. It would not then be occupied with the residence, but would be the premises on which a business is conducted.”
“an enclosed portion of land of considerable extent surrounding or attached to a dwelling house or other building serving chiefly for ornament or decoration.”
“One must…look at the use or function of the adjoining land to decide if its character answers to the statutory wording in s 116(1) – in particular, is the land grounds “of” a building whose defining characteristic is its “use” as a dwelling. The emphasised words indicate that the use or function of adjoining land itself must support the use of the building concerned as a dwelling. For the commonly owned adjoining land to be “grounds” it must be functionally an appendage to the dwelling, rather than have a self-standing function.”
“44. What indicates that a piece of adjoining land has become part of the “grounds” of a dwelling building? Technically, the fact that a dwelling building is sold together with adjoining land, as a single chargeable transaction for SDLT purposes, does not make that adjoining land, necessarily, part of the grounds of the dwelling building: s55 clearly envisages the possibility that the subject matter of a single chargeable transaction will include both residential and non residential land. Common ownership is a necessary condition for the adjacent land to become part of the grounds of the dwelling building – but not, in my view, a sufficient one. To that extent I cannot accept HMRC’s submission that it is sufficient that the adjacent land is available to the owners to use as they wish. One must, in addition, look at the use or function of the adjoining land to decide if its character answers to the statutory wording in s116(1) – in particular, is the land grounds “of” a building whose defining characteristic is its “use” as a dwelling? The emphasised words indicate that that the use or function of adjoining land itself must support the use of the building concerned as a dwelling. For the commonly owned adjoining land to be “grounds”, it must be, functionally, an appendage to the dwelling, rather than having a self-standing function. 45. This formulation is, I believe, consistent with the analysis in Hyman at [92], provided one reads that paragraph to the end. I accept that the third sentence of [92], read in isolation, looks much like HMRC’s submission in this case about the sufficiency of common ownership, which I have not accepted; but later in the same paragraph the Tribunal stated that land – which I read as land under common ownership and control with the dwelling building – “would not constitute grounds to the extent it is used for a separate e.g. commercial purpose”
“the use or function of adjoining land itself must support the use of the building concerned as a dwelling.”
“Neither the Upper Tribunal nor the Court of Appeal in Hyman attempted to give a definition of the word "grounds". Therefore, as the Upper Tribunal held, the correct approach to determining whether land forms part of the "grounds" of a property involves looking at all the relevant facts and circumstances and weighing up the competing factors and considerations, where they point in different directions, in order to reach a conclusion. This is, essentially, an evaluative exercise.”
“49 …Given that 'garden' or 'grounds' are ordinary English words which have to be applied to different sets of facts, an approach which involves identifying the relevant factors or considerations and balancing them when they do not all point in the same direction is an entirely conventional way of carrying out the evaluation which is called for.”
“30. …section 116 is concerned with characterising property either as residential property on the one hand, or non-residential property on the other. That characterisation of property applies generally for the purposes of SDLT; not merely to the availability of one form of relief against tax. Land does not cease to be residential property merely because the occupier of a dwelling house could do without it.”
“The site comprises predominantly pastoral farmland divided into several fields, with areas of woodland located in the centre, north and the north west. Woodmancote Place is located in the centre west, comprising multiple residential dwellings and ancillary units, with tennis courts to the north. St Peter's Church with an associated graveyard is present in the south west and further residential dwellings with gardens are located in the south east of the plot. Multiple ponds and drains are present throughout the study area... A number of telegraph/electricity poles have been identified on site. It should be noted that features such as these may cause an obstruction to large scale cultivation of that area. The majority of the field boundaries are demarcated with fencing, minor hedgerows and occasional trees. The site lies within the agricultural area of Henfield in West Sussex and within the Low Weald and Pevensey Character Area. The immediate surrounding area has been noted to include further agricultural land in most directions. Brighton Road lies adjacent to the south with further residential dwellings with gardens located beyond. In addition, Blackstone Lane borders part of the eastern site boundary.”
“During this time there were equine & farming practices in operation on the property... Part of the equine practice was the production of hay each summer. The deer park was established in 2010 and I ran the deer park until the land and deer were sold with the property back in 2019. I still help manage the deer commercially with a herd of approximately 200 head.”
“Since my tenure at Woodmancote it has been a working farm with horses, deer and sheep grazing at various times regularly through each year even despite the Rampion works which temporarily disrupted the horse farming activities. Apart from all the farming activities we are obliged by the highways and councils to maintain multiple footpaths which is both time consuming and has required additional specialist farming equipment.”
“Your home was sold by Mrs Christianne Neilson, a client of mine whom I acted for between 2015 and 2017 in connection with the construction of the Rampion Wind Farm. I agreed terms for the compensation for the cable route running through the farm, this included the payment for the easement together with compensation for the loss of income from the farming activities during the construction period. In addition to the negotiation with Fisher German Priestner (agent for the Rampion scheme) I also acted for Mrs Neilson on the farming side advising on the Basic Payment Scheme claims submitted to the Rural Payments Agency each year and the ELS (Entry Level Stewardship) Agreement that ran on the farm. The farmland was used for two principal purposes through the tenure of the Neilson family; a deer farm and the breeding of showjumpers. There was also some over winter grazing of sheep from time to time. The agricultural activities met the requirements of the Rural Payments Agency satisfying the claim for Basic Payment and for the environmental stewardship scheme in operation at the time.”
“At the time of purchase, there was a commercial deer park run by the son of the owner. We purchased the herd and contracted the existing deer manager to oversee the husbandry of the herd, invoice attached in SDLT Supporting Documents 030723 page 6. The deer park has at least 17 public footpaths and is a registered Sussex walk.”
“... soil erosion in Fields 84, 86, 87 and 88 in relation to the cable laying and reinstatement works carried out from 2015 to 2018 in relation to the land shown outlined in red on the attached plan, with a reservation to claim in the future for future disturbance and inconvenience, crop losses and reinstatement to the extent that they arise due to drainage problems and subsidence solely as a result of the cable laying works.”
“733. Easement must be appurtenant. A person possesses an easement in respect of his enjoyment of some estate or interest in a particular piece of land, and the easement is said to be appurtenant to that land. No one can possess an easement irrespective of his enjoyment of some estate or interest in a particular piece of land, for there is no such thing as an easement in gross. When validly annexed to the land constituting the dominant tenement an easement remains inseparably attached to that tenement so long as the easement continues to exist; the easement cannot be severed from the dominant tenement, nor can estates be created in it apart from the dominant tenement, nor can it be made a right in gross. An easement which is created for a legal estate is to enure for the benefit of the land to which it is intended to be annexed. Nothing in theLaw of Property Act 1925 affects the right of a person to acquire, hold or exercise an easement over or in relation to land for a legal estate in common with any other person, or the power of creating or conveying such an easement.”
“Legal easements. (1) Where an easement, right or privilege for a legal estate is created, it shall enure for the benefit of the land to which it is intended to be annexed. (2) Nothing in this Act affects the right of a person to acquire, hold or exercise an easement, right or privilege over or in relation to land for a legal estate in common with any other person, or the power of creating or conveying such an easement right or privilege.”
“As the farm is all permanent pasture it limits the options to choose from within the scheme, however I think still worthwhile. Arable land has various cropping alternatives such as bird, nectar, fallow, cultivated plots for ground nesting birds etc which are not available for grassland.”
“54. They summarised their conclusions in a lengthy passage at [58] which deserves quotation in full: “In our opinion, the following points should be considered in determining the impact of works needed to a building on its suitability for use as a dwelling: … (2) Looking at the building as at the effective date, an assessment must be made of the extent to which it has the fundamental characteristics of a dwelling, including the extent to which it is structurally sound. Is it, for instance, a desirable house which has become dilapidated and requires updating, or is it an empty shell with no main roof? Subject to the points which follow, in principle the former is likely to be suitable for use as a dwelling and the latter is not. … (5) If occupation at the effective date would be unsafe or dangerous to some degree (for instance, because the building requires rewiring), then that would be a relevant factor, but would not of itself render the building unsuitable for use as a dwelling. ... (7) Applying the principles we have set out, the question for determination is then whether the works of repair and renovation needed to the building have the result that the building does not have the characteristics of a dwelling at the effective date, so it is no longer residential property.” “In our opinion, the following points should be considered in determining the impact of works needed to a building on its suitability for use as a dwelling: … (2) Looking at the building as at the effective date, an assessment must be made of the extent to which it has the fundamental characteristics of a dwelling, including the extent to which it is structurally sound. Is it, for instance, a desirable house which has become dilapidated and requires updating, or is it an empty shell with no main roof? Subject to the points which follow, in principle the former is likely to be suitable for use as a dwelling and the latter is not. … (5) If occupation at the effective date would be unsafe or dangerous to some degree (for instance, because the building requires rewiring), then that would be a relevant factor, but would not of itself render the building unsuitable for use as a dwelling. ... (7) Applying the principles we have set out, the question for determination is then whether the works of repair and renovation needed to the building have the result that the building does not have the characteristics of a dwelling at the effective date, so it is no longer residential property.”