Recent tax tribunal decisions have demonstrated that taxpayers, including property owners, can successfully challenge HMRC’s interpretations in complex Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT) disputes. These rulings are significant for landlords and agents as they highlight the importance of understanding property classifications and the potential for reclaiming substantial tax sums when HMRC’s assessments are incorrect.

Background: Tax Tribunal Successes in Property-Related Disputes

While HMRC often appears to have the upper hand due to its extensive resources and legal expertise, recent cases show that the First-tier Tribunal (FTT) and Upper Tribunal (UT) apply the law independently and do not always side with HMRC. Over the last few years, several taxpayers have won appeals concerning SDLT and CGT, particularly in cases involving the classification of property components such as gardens, woodland, storage units, and mixed-use land.

However, these victories come after prolonged legal battles, often involving significant personal stress, high legal costs potentially reaching six figures, and years of uncertainty. Many taxpayers do not have the benefit of legal expenses insurance, making the process financially and emotionally demanding.

Key Tribunal Cases Affecting Landlords

1. Sehgal v HMRC (SDLT – Storage Unit Case)

In this 2025 case ([2025] UKFTT 1439 (TC)), the taxpayer purchased a London apartment, parking space, and a separate basement storage unit for £18,250,000. HMRC treated the entire transaction as wholly residential, applying higher SDLT rates. The tribunal found that the storage unit did not “subsist for the benefit of” the apartment, meaning it was not part of the residential property. Consequently, non-residential (mixed-use) SDLT rates applied, resulting in HMRC being ordered to repay £1,749,250.

2. Marie Guerlain-Desai v HMRC (SDLT – Woodland Not Grounds)

In 2024 ([2024] UKFTT 515 (TC)), the purchase of Durford House included approximately 4 acres of formal garden and 12 acres of woodland. HMRC claimed the entire 16.6 acres constituted the “grounds” of the dwelling, subjecting the whole to residential SDLT rates. The tribunal disagreed, ruling that the woodland was not part of the residential grounds, so mixed-use SDLT rates applied. This decision led to a refund of £225,250, as the correct SDLT was £147,500 instead of the £372,750 initially charged.

3. HMRC v Taher & Zahra Suterwalla (SDLT – Paddock Case)

This case involved the purchase of a family home with gardens, a pavilion, tennis court, and an adjoining paddock. The taxpayers treated the paddock as non-residential land, while HMRC argued it was part of the residential grounds. The FTT ruled in favour of the taxpayers ([2023] UKFTT 450 (TC)), a decision upheld by the Upper Tribunal in 2024 ([2024] UKUT 188 (TCC)). The difference in SDLT was £161,250, with HMRC’s higher assessment being overturned.

4. Brzezicki v HMRC (SDLT – Trout Fishery Case)

In this 2024 case ([2024] UKFTT 845 (TC)), the property included a house, garden, a man-made carrier stream, an island, and a fishing cabin used for a commercial trout-fishing operation. HMRC treated the entire property as residential, but the tribunal found a substantial non-residential element, applying mixed-use SDLT rates. The taxpayer received a refund of £70,250, as the correct SDLT was £62,000 compared to the £132,250 initially paid.

5. Nunn v HMRC (CGT – Private Residence Relief)

In this 2024 case ([2024] UKFTT 298 (TC)), a landowner sold part of his garden for £295,000. HMRC contended that the land had ceased to be part of the garden by the disposal date, resulting in a CGT charge of £72,633.80 plus a suspended penalty. The tribunal found the disposal occurred earlier, while the land still formed part of the garden, allowing Private Residence Relief to apply and negating the CGT liability.

Implications for Landlords and Agents

These cases illustrate several important points for UK landlords and property professionals:

• HMRC’s view is not always correct: Tribunal rulings show that HMRC’s interpretation of property boundaries and usage can be challenged successfully.
• Property classification matters: The distinction between residential, non-residential, and mixed-use land can significantly affect SDLT and CGT liabilities.
• Mixed-use property disputes are increasingly common: Landlords should be aware of the complexities involved in mixed-use classifications.
• Tribunal outcomes can be unpredictable: Judges have described some results as “surprising,” emphasising the need for careful case-by-case analysis.
• Early advice is crucial: Obtaining professional guidance on property structuring before transactions can prevent costly disputes and lengthy tribunal proceedings.

Is the Tax Tribunal System Fair?

In principle, the tribunal system operates independently and often rules against HMRC when the facts and law support the taxpayer. However, in practice, the process can be challenging due to the high costs, lengthy timescales, and the imbalance of resources between HMRC and individual taxpayers. While justice exists, it often comes at a significant financial and emotional cost.

Final Considerations for Landlords

Landlords should recognise that although taxpayers can and do win tax tribunal cases, the journey is rarely straightforward or inexpensive. The high stakes involved in SDLT and CGT disputes underscore the importance of thorough documentation, clear property classification, and early professional advice.

For landlords seeking to review their property structures or prepare for potential tax challenges, consulting with tax advisers or accountants well-versed in SDLT and CGT matters is advisable to mitigate risks and avoid protracted disputes.

Upcoming Support from TLA

The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026. This platform will feature verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other relevant service providers are invited to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/