Ladson Preston Limited & Anor v The Commissioners for HMRC

Multiple dwellings relief depends on the nature of the chargeable interest acquired. A building counts as a dwelling while being constructed only where there is a physical manifestation of the building on the land. Planning permission, preparatory activities and ground-investigation works are insufficient by themselves. Where completion is the effective date, the chargeable interest is assessed as it stood at completion. Work undertaken after completion on the same day does not affect entitlement to the relief.

The appellants acquired land on which residential development was planned. Ladson Preston Limited acquired bare land with planning permission for two buildings containing flats. AKA Developments Greenview Limited acquired land containing commercial structures and boreholes drilled to investigate the ground; demolition and clearance began after completion on the effective date.

The First-tier Tribunal held that neither appellant qualified for multiple dwellings relief under Schedule 6B of the Finance Act 2003. The appeals concerned whether the planning permissions, boreholes and post-completion works meant that buildings were in the process of being constructed for use as dwellings, and whether the effective date required consideration of events throughout the day.

1. Appeals dismissed in substance. Ground 2 and Ground 4 failed. Ground 1 was not determined. Ground 3 succeeded to the extent that the FTT had erred in its reasoning about the boreholes, but the decision was remade with the same result.
2. Multiple dwellings relief under paragraph 2(2) of Schedule 6B depends on whether the chargeable interest acquired consists of an interest in at least two dwellings and other property. Paragraph 7(2)(b) explains what counts as a dwelling; it does not itself confer the relief.
3. The phrase “building ... in the process of being constructed” is composite. It requires some physical manifestation on the land of the building that is being constructed for use as a dwelling. Planning permission, a firm intention to build, engagement of architects or other non-physical preparatory steps are insufficient. Paragraph 7(5), which addresses off-plan transactions where construction has not begun, supports that distinction.
4. The boreholes were physically present on the land transferred, so the FTT was wrong to focus on who dug them and wrong to treat them as too insignificant to form part of the main subject-matter. However, they were ground-testing operations and did not form part of the proposed buildings or foundations. They therefore did not satisfy paragraph 7(2)(b).
5. Where completion is the effective date, entitlement to relief is assessed by reference to the chargeable interest as it stood at the time of completion. This conclusion follows from paragraph 2(2), not from deciding whether section 119 specifies a whole day or a point in time. The tribunal expressed no conclusion on the different situation potentially arising where section 44 deems substantial performance to be the effective date.
6. The proceedings before the FTT remained live in relation to any unresolved SDLT amount or other issues.

• Upper Tribunal (Tax and Chancery Chamber): appeals from the First-tier Tribunal’s decision released on 7 July 2021. The Upper Tribunal dismissed Grounds 2 and 4, declined to determine Ground 1, and set aside and remade the FTT’s decision on the boreholes under Ground 3, leaving the outcome unchanged.
• First-tier Tribunal (Tax Chamber): held that neither appellant was entitled to multiple dwellings relief and granted permission for any remaining issues concerning the SDLT liability to be resolved.