Property tax

Taxpayer loses appeal on LBTT additional dwelling supplement

The First-tier Tribunal for Scotland Tax Chamber (FTSTC) agreed with Revenue Scotland’s (RS) view that a property that had been sold was never the taxpayer’s main residence. He had only lived there for 18 days. A refund of the additional dwelling supplement (ADS) was refused.

The taxpayer sold the first property and 18 days later purchased the second property with another individual (M). He did not declare any liability for ADS on the purchase. Throughout, M owned another house, the third property, which was sold exactly three years after the purchase of the second property. He lived in this house during the 18 days between sale and purchase of properties 1 and 2.

The taxpayer amended the return for the purchase of the second property at this point, claiming that ADS was due on that purchase as the third property was his main residence, not the first. He claimed a refund as it had now been sold. RS argued that this property was never his main residence, and so no ADS refund was due.

The FTSTC agreed with RS that the third property was never his main residence. Although it had been his only home for 18 days, and he had lived there in that time, this was always planned as a temporary measure. The fact that it was then his residence did not mean that it had become his only or main residence.

The FTSTC did sympathise with the taxpayer, but could only go by the legislation. He would have been eligible for an ADS refund if he had cohabited with M before they bought the second property jointly, or if the first property had been sold after purchase of the second, but the tribunal could not allow for unfairness.

Blue v RS [2023] FTSTC 4

From Tax Update January 2024, published by Evelyn Partners LLP