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Annex cooking facilities inadequate for SDLT multiple dwellings relief

In Mullane and another v HMRC, the First-tier Tribunal denied the availability of SDLT multiple dwellings relief in respect of an annex that did not have cooking facilities capable of satisfying building regulations.

The First-tier Tribunal has held that SDLT multiple dwellings relief (MDR) was not available on the purchase of a property constituting a main house and an annex connected by a glass conservatory as the latter had insufficient facilities to be suitable for use as a separate dwelling.

Unlike in Fiander and another v HMRC, the tribunal did not consider that the proximity of the annex to the main house or marketing as a single property precluded separate dwelling treatment. The tribunal noted that communal entrances for separate dwellings were common. While the test was to be applied at completion, the tribunal did not believe that the need to add a lock to the door from the conservatory to the annex precluded separate dwelling treatment (whereas, in Fiander, it was held that the need to add a door was material). Single utility bills were immaterial as including utilities in rent was common.

However, central to the tribunal's reasoning was MDR's objective of increasing the supply of rented accommodation and, therefore, the tribunal focused on the kitchen facilities. Here, there was a microwave in the annex living area (which the tribunal considered insufficient) and a small cooker in front of the sink. The tribunal commented that this was unsafe (with no safe alternatives). MDR would have been available if the annex had been capable of satisfying building regulations and, at completion, a certificate need only be obtained. However, the tribunal considered that the arrangements here would not satisfy fire safety requirements, meaning that the annex was not suitable for use as a separate dwelling and MDR was unavailable.

This decision is interesting for the conclusion that the need for non-structural alterations following completion did not preclude MDR (which appears in keeping with HMRC's guidance), and the emphasis placed on the need to satisfy fire and building regulations. While not binding, the tribunal's views may be helpfully informative for other taxpayers considering the applicability of MDR.

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