Vereley Homes Limited v The Commissioners for HMRC [2026] UKFTT 695 (TC)

[2026] UKFTT 00695 (TC)Case No TC 09881
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 23 February 2026Date Judgment date: 12 May 2026
Taylor House, London
Appeal reference: TC/2025/01550
SDLT – residential property – garden or grounds – appeal dismissed
Further submissions: 2 April 2026
Before
TRIBUNAL JUDGE
Between
Vereley Homes LimitedAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentRoss Birkbeck, instructed through direct access. for AppellantLucy Lawrence, litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]Vereley Homes Limited (“VHL”) appeals against a closure notice dated 19 September 2024 under paragraph 23 of Schedule 10 to Finance Act 2003 (“FA 2003”).[2]The relevant property, the acquisition of which was charged to SDLT under the closure notice (the “Property”), consists of two titles: P152411, known as No.7 Saltern’s Way (“No.7”), and DT133700, known as No.9 Saltern’s Way (“No.9’”). The property was acquired by VHL on 7 September 2023.[3]Since 2004 both No.7 and No.9 have been in common ownership. In around 2011 the house at No.9 was demolished. Broadly speaking, the back garden of No.9 was integrated with the garden and grounds of No.7 (together, “Plot 1”), whilst the footprint of the house that was at No.9, together with its former front garden, was fenced-off and turfed (“Plot 2”). Plot 2 is accessible via a gate leading to the road. HMRC say that Plot 2 is accessible from Plot 1 through a gap in the fence, but VHL disputes this. The closure notice amended VHL’s SDLT return in respect of the acquisition, increasing the liability to stamp duty land tax (“SDLT”) by £82,750, on the basis that the property was residential for the purposes of section 116 FA 2003.[4]The only issue in the appeal is whether or not Plot 2 is part of the garden or grounds of the house on Plot 1 for the purposes of section 116(1)(b) and paragraph 18(3) of Schedule 4ZA FA 2003. It is accepted by the parties that if section 116(1)(b) is satisfied then paragraph 18(3) of Schedule 4ZA will also be met.[5]If Plot 2 is not part of the garden or grounds of the house on Plot 1 then it is common ground that the entire transaction is treated as non-residential: s 55 FA 2003. If the transaction is non-residential it is subject to the lower rates of SDLT provided for in Table B of s 55 FA 2003.[6]If the transaction is residential, because the purchaser is a company, then it is subject to the higher rates specified in the substitute Table A in paragraph 1(2) Schedule 4ZA FA 2003.

Hearing

[7]We heard live witness evidence from:(1) Alex Brown, a director of VHL; and(2) Eliot Brown, also a director of VHL.[8]I have also considered:(1) a hearing bundle (143 pages);(2) an authorities bundle (212 pages);(3) the appellant’s skeleton argument (6 pages);(4) HMRC’s skeleton argument (10 pages); and(5) post-hearing submissions from the appellant (3 pages) and HMRC (in email).[9]I accept both witnesses were reliable in their evidence. They admitted when they could not recall facts. However, their testimony was of somewhat limited utility, as their first visits to the Property were in June and August 2023.

Law

[10]The statutory provision in dispute is as follows: “Interpretation etc 116 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 or 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 right over land that subsists 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.” [my emphasis] (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 or 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 right over land that subsists for the benefit of a building within paragraph (a) or of land within paragraph (b); [my emphasis]

Cases

[11]In HMRC v Suterwalla [2024] UKUT 188 (TCC) Judges Sinfield and Greenbank stated that when considering whether land forms part of the grounds of a building the following sixteen pointers were of assistance:
“(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.”

Appellant’s Case

[12]VHL contends that Plot 2 did not form part of the garden or grounds of the dwelling on Plot 1. Although the two plots were in common ownership and were contiguous, these features are not sufficient, in themselves, to establish that Plot 2 constituted part of the garden or grounds of No.7. More than mere adjacency and ownership is required. The physical separation between the plots, maintained by fencing over many years, demonstrates that Plot 2 remained a distinct piece of land that was not brought into the curtilage or domestic setting of No.7.[13]The history of the two parcels support this position. No.9, which originally contained its own dwelling and garden, remained a separate property even after it came into the ownership of the same individual who owned No.7. The demolition of the house at No.9 did not convert its former garden into the grounds of No.7. Only a portion of No.9 (Area A) was ever incorporated into No.7’s usable garden; the remainder remained fenced-off and continued to exist as an independent piece of land.[14]Accordingly, Plot 2 was non‑residential land at the effective date of the transaction. So the acquisition consisted partly of non‑residential property, with the result that the transaction as a whole fell to be treated as non‑residential under section 55 FA 2003.

HMRC’s case

[15]HMRC submit that the appellant has not discharged the burden of showing the closure notice to be incorrect and that the decision should be upheld.[16]HMRC’s position is that the acquisition of the Property constituted a purchase of wholly residential property. The land formerly comprising No.9 formed part of the garden or grounds of the dwelling at No.7 at the effective date of the transaction, with the result that the higher residential rates of SDLT applied. HMRC rely on the long period of common ownership, the historical integration of the two parcels, and physical features that in their view show that the land functioned as part of the same residential unit. This includes the garage at No.7 which encroached onto land formerly belonging to No.9, and to the letter from the neighbouring owner in 2011, which recorded that the owner of No.7 had incorporated the rear garden of No.9 and intended to maintain the remainder as a memorial garden.[17]The layout and topography of the combined land support the conclusion that Plot 2 formed part of the grounds. They rely on the contiguity of the parcels, the apparent presence of an entryway in the fence, the height difference being of no significance, and the evidence that the area could be accessed from both the dwelling and the road. They submit that the existence of fencing does not prevent the land being part of the grounds, drawing on authority for the proposition that land may fall within the grounds notwithstanding barriers or a limited level of use. They also note the absence of any commercial or agricultural activity on Plot 2, and rely on the principle that passive land, even if overgrown, may still constitute grounds.[18]The marketing materials presented the property as a single residential holding with a substantial area of land. HMRC emphasise that SDLT must be assessed by reference to the position at completion, without regard to the developer’s future intentions. A multi-factorial assessment of the physical, historical, and functional factors points clearly towards Plot 2 being part of the garden or grounds of the dwelling on Plot 1.

Findings of Fact

[19]The sole issue before the Tribunal is whether Plot 2 is part of the garden or grounds of the house on Plot 1.[20]The previous owner of No.7 was Cedric Rowland Samson, from 1978 until his death in 2020. No.7 has at all relevant times contained a residential house.[21]An application for planning permission (made in 1999 but approved in January 2000) shows part of the building on No.7 extending onto the land of No.9 (Figure 1). We know this to be a garage from the plans of the Property included in the Savills materials. That garage is different from the garage for which planning permission was sought in 1999, which is shaded pink on the plans. There does not appear to be an appreciable difference in height between the area in front of the house and the area in front of the garage adjoining the house (Figure 2). From the 1999 plans we know that the garage existed in 1999.[22]No.9 was owned by Joan Samson (Cedric’s wife) until her death in 2004, when Cedric inherited it (although no transfer was registered).[23]Up until sometime around 2011, there was a residential house on No.9. However, this was demolished at around that time.[24]On 29 May 2011, Mr D G White of 11 Salterns Way (the neighbouring property), wrote to the Head of Planning and Regeneration Services at the Borough of Poole Council. This letter was saved as part of the public record relating to the planning permission decision to permit demolition of the house on No.9, and is available to view on the Borough of Poole planning portal. Mr White wrote:
“I have previously written to your housing director/manager asking when [No.9] was going to be brought back as a family home. [No.7] has taken the garden of [No.9]. In a world where people are looking for a home, and when councils need to maximise value, how is it that a home at [No.9] can be allowed to be unoccupied for 30 years. You have granted permission for its demolition, but the owner, Cedric Sansom, has plans just to flatten it, turf it and create a memorial garden. So there are no plans to re-develop it. See enclosed letter, stating his plans, which once read and copied by you, I would like back.”
[emphasis in original]

[emphasis in original]

[25]We do not have in evidence the letter that Mr White enclosed. In the absence of evidence to the contrary, I find that No.9 was indeed unoccupied for the preceding 30 years, so since May 1981.[26]On 1 April 2012, No.9 had its council tax band deleted. The house on No.9 will therefore have been demolished by this point.[27]Mr Sansom died in 2020. On his death, ownership of his property passed to his estate.[28]The Property is shown in an annotated aerial photograph (Figure 3).[29]The property was marketed by Savills. The marketing materials list it as “7-9 Salterns Way” and title the listing “Detached house with land in a prime location adjacent to Poole Harbour”. A (non-vertical) aerial photograph in the marketing material (Figure 4) shows the property with two blue for sale signs at the front, one next to each entrance. Plot 2 is the rectangle bounded yellow and red in the top right-hand corner of Figure 3.[30]The marketing materials also contain a photograph of Plot 2 (Figure 5). The photograph was taken facing the direction of the road from which the Property is accessed. The photograph shows Plot 2 as a mainly turfed area, but as unkept, with long weeds and fallen branches. Whilst Plot 2 is mainly turfed there is a raised concreted area by the fence on the right of the photograph, which itself borders Plot 1. The raised concreted area extends about 2m into Plot 2. From another photograph it is apparent that there is a channel between the fence and the raised concrete area. That channel is itself concreted and about one foot wide.[31]There is also a gap in the fence, between Plot 1 and Plot 2, on the right of Figure 5. In front of this gap in the fence there is concrete that extends about 50cm into the garden. That smaller piece of concrete is not connected to the larger raised concreted area – that is evident by zooming in on the areal photographs. However the gap between the two concrete areas is not immediately visible on Figure 5, due to perspective. There is not a channel between the fence and the concrete area in front of the gap in the fence – that is apparent from the aerial photographs including zooming in on Figure 3. Rather, the 50cm concrete area appears to meet the fence.[32]At the time of the acquisition there was dense vegetation on Plot 1 adjacent to the gap in the fence. This meant that the gap in the fence was not visible from Plot 1 by Mr Alex Brown or Mr Eliot Brown when they visited the site.[33]To access Plot 2 from the road it is necessary to go through two gates. The first of these gates is a five-bar wooden gate, shown in Figure 6. This gives access to a rectangular area roughly the size necessary to park a car. From that rectangular area the remaining part of Plot 2 is accessed by a two-panel wooden gate which is on the opposite side of the rectangular area to the five-bar wooden gate. The two-panel wooden gate is partly visible in Figure 5, towards the middle-right. It is partially obscured by long grass. When Mr Alex Brown and Mr Eliot Brown visited Plot 2 it was difficult to open this gate due to the length of the grass.[34]HMRC exhibited a photograph of Plot 2 taken from the road, obtained from Bing Streetside (Figure 6). Mr Eliot Brown testified that the photograph was not as it was when he visited the Property. The fence appeared newer in the photo. Also the conifer trees that are visible inside the fence that borders the road (see Figure 5) are not present in Figure 6. For these reasons I infer that the photo in Figure 6 was taken several years ago. The gap in the fence is also visible in Figure 6. In Figure 6, Plot 2 seems well maintained with the grass recently cut.[35]There is a height difference of about 2 feet at the fence between Plot 1 and Plot 2. That was the evidence of Mr Eliot Brown.[36]I find that the gap in the fence is deliberately made. From Figure 5 there appears to be a clean break in the fence at that point. The 50cm concrete area is in front of the gap in the fence. This suggests that either the gap or the concrete (or both) were located where they are to mitigate the height difference between Plot 1 and Plot 2.[37]Given the well-kept appearance of Plot 2 in Figure 6 I find that Plot 2 was used as a garden for the house on Plot 1, which was accessed by means of the gap in the fence. That is also consistent with Mr White’s letter, that suggests the intention was for Plot 2 to be a (memorial) garden. The concrete in front of that gap will have acted as a step to mitigate the height difference. The partial fencing off from Plot 1 may have been done to assist reflection in a memorial garden.[38]By the time of sale that access route from Plot 1 to Plot 2 had become overgrown, such that it was not visible to either Mr Alex Brown or Mr Eliot Brown when they visited the site. There is no evidence that the house was occupied between Mr Sansom’s death in 2020 and the acquisition in September 2023. We see from Figure 5 that Plot 2 had become overgrown too. However, I consider it likely that such overgrowth could be relatively easily paired back and the access route reinstated. In those circumstances, I do not consider that the access route being overgrown prevented there from being a connection between Plot 1 and Plot 2 at the point of the acquisition.[39]There are no legal or other constraints that have been identified on the use of Plot 2.[40]At no relevant time was Plot 2 used or occupied for a purpose separate from and unconnected with the dwelling on Plot 1. Indeed the encroachment on No.9’s garden of the garage joined to the house on No.7 and the clear integration of the back garden of No.9 into the garden of No.7 suggest that the plot of No.9 was generally used to benefit the occupation of No.7.[41]Standing back and viewing the evidence in the round, having regard to the factors in Suterwalla, I find that Plot 2 was part of the grounds and garden of the house on Plot 1 at the time of the acquisition.[42]Accordingly the appeal is dismissed.

Right to apply for permission to appeal

[43]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 12 May 2026 Appendix: Photographs Figure 6: Bing Streetside photograph of Plot 2. The red box, added by the Tribunal, highlights the gap in the fence.