Did additional property tax rates apply?
James v WRA. Mr James (J) owned a property located at the end of a terraced row in Wales. He purchased the property next door, and immediately undertook work to create internal access between the two. Work continued to remove the partition wall to create a single large property. The Welsh Revenue Authority had responded to a request for clarification from J, saying that as the property was clearly going to be two separate dwellings at the time of purchase, the higher rates of land transaction tax (LTT) would be due. J submitted the LTT return, self-assessing £nil.
Law. The higher LTT rates apply where a buyer already has an interest in a residential property and buys a second (or subsequent) interest in another worth £40,000 or more. The key date for LTT is the date of completion, rather than exchange.
Decision. Despite the clear intention of J to merge the two properties, and in fact it had historically been a single property, it was obvious that there were two distinct properties at the date of completion. The appeal against the amount of LTT was dismissed. However, the penalty imposed had not been applied on the correct basis. The WRA had not given credit for disclosure, saying that J’s refusal to concede the point negated this. The Tribunal rejected this and allowed J’s appeal against the penalty to the extent that it should be recalculated as an unprompted disclosure.
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