August 4, 2026
The Scottish Tribunal held that two Category A listed Glasgow buildings were non-residential for LBTT purposes. Their historic domestic origins did not outweigh decades of institutional and office use, restrictive planning status and the extensive works required before anyone could live there.
Bagshaw Limited purchased two interconnected Category A listed buildings in Glasgow on 17 December 2020: a Victorian townhouse at 19 Park Circus and a mews building at 22 Park Terrace Lane. The total consideration was £1.7 million.
The original LBTT return treated the acquisition as residential. An amended return later sought Multiple Dwellings Relief. In April 2024, the company instead made a repayment claim of £111,000 on the basis that the transaction should have been taxed at the non-residential rates. Revenue Scotland refused that claim, and the dispute came before the First-tier Tribunal for Scotland Tax Chamber.
The buildings had originally been constructed for residential occupation in the Victorian period. That history was not, however, decisive.
From around 1920, the properties had been used as a nursing home, which included an operating theatre. They later served as Archdiocesan offices, partly as an Archbishop’s residence with continuing office use, as a Franciscan convent and, finally, as offices for a charity until 2019.
The Tribunal therefore examined what the buildings had objectively become over time, rather than asking only what they had once been. It concluded that they had lost their residential identity many decades before the purchase.
The relevant issue under section 59(1) of the Land and Buildings Transaction Tax (Scotland) Act 2013 was whether the properties were “residential property”. That includes a building used or suitable for use as a dwelling, or one in the process of being constructed or adapted for such use.
The properties were not being used as dwellings at completion. The central question was therefore whether, in their condition and circumstances at that date, they were suitable for use as dwellings.
The Tribunal adopted the multi-factorial approach reflected in the Court of Appeal’s SDLT decision in Mudan. Suitability is an objective question and must be assessed in the round. No single feature necessarily determines the answer.
Planning status was important. Office use had been authorised since at least 1998, and no permission for residential conversion existed at the effective date. Residential permission was not obtained until April 2022.
The physical condition was equally significant. The properties had been stripped back, utilities had been removed or disconnected and there were no usable domestic facilities. Extensive works were required before the buildings could be occupied as homes.
This was not simply a case of a recognisable dwelling needing ordinary repair or modernisation. The combination of long-standing non-residential use, office planning status and the scale of the required works meant that the buildings were not suitable for use as dwellings at completion. The appeal was therefore allowed.
Although Bagshaw concerns LBTT, the statutory language is closely aligned with the SDLT definition of residential property. The reasoning is therefore likely to be cited in disputes throughout the UK concerning derelict, converted or former institutional buildings.
The case does not establish that an uninhabitable property is automatically non-residential. Nor does it create a checklist under which the absence of a kitchen, bathroom or connected utilities is conclusive. The judgment is fact-sensitive and rests on the cumulative effect of the evidence.
What made Bagshaw unusual was the strength and consistency of the factors pointing away from residential status. These were not merely houses in poor repair. They had undergone a long history of institutional and commercial use, had office planning status and required substantial conversion before residential occupation could lawfully and practically resume.
For advisers and conveyancers, the most important point is evidential. The classification must be supportable by the facts existing at the effective date. Later conversion works or a subsequent planning permission do not retrospectively alter the property’s earlier status.
A robust file should therefore contain the planning history, lawful use, marketing material, surveys, photographs, utility status, schedules of required works and any specialist reports. The purchaser’s future intention is relevant context, but it cannot replace objective evidence about the building itself.
The initial return in Bagshaw was made on a residential basis and the taxpayer later advanced different analyses before settling on non-residential treatment. That history also underlines the importance of undertaking the classification exercise before completion rather than attempting to reconstruct it years later.
The decision should not be read as undermining the principle that a dwelling can remain residential despite significant disrepair. Many buildings remain objectively suitable for use as dwellings even where occupation would be uncomfortable, imprudent or temporarily impossible.
Bagshaw sits at the other end of the spectrum. The works were extensive, the domestic facilities were absent, the planning status was non-residential and the properties’ historic residential character had been displaced by many decades of other uses. The result arose from that combined picture—not from one missing facility or one planning document.
Bagshaw is a helpful reminder that architectural appearance and historic origin do not settle the tax classification of a property. A grand Victorian townhouse can cease to be residential property where its use, planning status and physical condition demonstrate that it is no longer suitable for use as a dwelling.
The decision is favourable to the taxpayer, but it is not a general licence to treat derelict or renovation properties as non-residential. The dividing line remains intensely factual. The stronger the contemporaneous documentary evidence, the more defensible the filing position will be.
