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Love and the buildings transaction tax

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In Dr C Goudie & Dr A Sheldon v Revenue Scotland [2018] FTSTC 3, the First-tier Tribunal for Scotland dismissed an appeal against Revenue Scotland’s decision to refuse to repay the land and buildings transaction tax additional dwelling supplement to the appellants. The additional dwelling supplement is a 3% surcharge payable on the purchase of ‘additional’ Scottish dwellings by individuals and the purchase of Scottish dwellings by companies. The decision, though unarguably correct in law, illustrates the harsh effect of the legislation on couples.

The relevant facts were these: the (unmarried) appellants bought a property in Edinburgh together. At completion, one of the appellants, Dr Goudie, retained a share of another property that he had purchased jointly with others in the past. He had since moved out of that property to live with the other appellant, Dr Sheldon, in rented accommodation. The appellants (correctly) paid the additional dwelling supplement (£11,460) on the purchase of the new property. Dr Sheldon was deemed to own Dr Goudie’s interest in the first property due to her living with him as though married to him. Later, Dr Goudie disposed of his interest in the first property and the appellants applied to reclaim the £11,460. Their application was refused and their appeal against that decision was dismissed. The reason is that Dr Sheldon had never lived in the first property. If she had done at any time in the 18-month period preceding her purchase with Dr Goudie, the appellants’ application would have been valid.

The effect of the legislation is harsh because had she purchased the property in her sole name (and provided that she had not been living with Dr Goudie as though married to him), the additional dwelling supplement would not have been payable by her. Similarly, had Dr Goudie purchased the property in his sole name, although the additional dwelling supplement would have been payable initially, he would have been entitled to reclaim it on the disposal of the first property. So Dr Goudie is worse off because he purchased jointly with Dr Sheldon (who, remember, did not own another dwelling) and Dr Sheldon is worse off because she had not lived in the first property. The result would have been the same if they had purchased a property in the rest of the UK unless Dr Goudie had purchased the property in his sole name. The distinction is because the SDLT and land transaction tax higher rates – the equivalents to the additional dwelling supplement for purchases of dwellings in the rest of the UK – are not engaged by virtue of a cohabitant’s ownership of a dwelling. This is the result of the decision to use complex, closely-articulated legislation to determine the incidence of the additional-dwelling surcharge (and the higher rates) and a deeming provision that, in effect, punishes purchasers for being in love. 

Sean Randall, head of stamp taxes, KPMG (

Issue: 1422
Categories: In brief