In a recent SDLT MDR case, the FTT highlights the evidential demands of the ‘being constructed ... for use as a dwelling’ test, revisits the SDLT treatment of options, and adopts an interesting formulation of linked transactions.
Although Multiple Dwellings Relief (MDR) has been abolished for SDLT, the decision of the First-tier Tribunal in Shinebrook Ltd v HMRC [2026] UKFTT 602 (TC) has some points of interest for SDLT specialists.
The taxpayer appears to have been hampered by their original advisers, in their own words, ‘going bust’, and a KC being appointed only at the last minute to argue the case. Coupled with the taxpayer not attending the hearing, this meant the taxpayer’s evidence was weak.
Shinebrook Ltd had taken an option to buy a commercial building with planning permission for its demolition and the construction of a new building in its place for 17 flats. The arguments made by Shinebrook were that:
there was a single transaction comprising both the option of 1 April 2021 and the transaction on completion on 15 May 2021; and
the works of demolition on the building had started, so they could apply mixed use treatment combined with MDR (the option being non-residential and the property at completion counting as 17 dwellings in the process of construction).
Shinebrook failed on a number of grounds. Although there was some evidence of demolition work having started before completion of the purchase, there was no evidence of any construction of the new building for the 17 flats. (Photographs without date stamps were of little evidential value.)
Also, it was not correct to analyse the purchase as a single transaction in order to calculate the tax (Shinebrook were trying to take advantage of the rule that the 3% surcharge does not apply to a single mixed property transaction, even where MDR is claimed). Rather, the option was a chargeable transaction in its own right, with the two transactions being linked.
Those advising on SDLT might find particularly interesting the following parts of the judgment:
[129]: this says there must be some physical manifestation of what is to become the new building for the ‘in the process of construction’ rule to apply, applying Ladson [2022] UKUT 301 (TCC) (the case had been stayed pending the Upper Tribunal’s ruling in Ladson);
[131]–[133]: this discusses the SDLT treatment of an option; and
[134]–[136]: this discusses linked transactions, interestingly saying at one point: ‘The Stamp Office appears to accept the principle that for transactions to be linked, there must be an attempt to split a composite transaction to secure an SDLT advantage.’ This has been criticised as being far too narrow a formulation. For example, it is common for commercial property lettings to be dealt with as a number of separate lease documents for good commercial reasons. Here, the parties do not want separate documents in order to secure an SDLT advantage, but the circumstances of the transactions might well indicate the leases are linked. For example, there can be separate leases of a building from one landlord and of an adjoining parking area from another landlord where the two landlords are ‘connected persons’ and the lessee would not have wanted to take one lease without the other.
Home >Articles > Shinebrook: demolition is not construction
Shinebrook: demolition is not construction
In a recent SDLT MDR case, the FTT highlights the evidential demands of the ‘being constructed ... for use as a dwelling’ test, revisits the SDLT treatment of options, and adopts an interesting formulation of linked transactions.
Although Multiple Dwellings Relief (MDR) has been abolished for SDLT, the decision of the First-tier Tribunal in Shinebrook Ltd v HMRC [2026] UKFTT 602 (TC) has some points of interest for SDLT specialists.
The taxpayer appears to have been hampered by their original advisers, in their own words, ‘going bust’, and a KC being appointed only at the last minute to argue the case. Coupled with the taxpayer not attending the hearing, this meant the taxpayer’s evidence was weak.
Shinebrook Ltd had taken an option to buy a commercial building with planning permission for its demolition and the construction of a new building in its place for 17 flats. The arguments made by Shinebrook were that:
there was a single transaction comprising both the option of 1 April 2021 and the transaction on completion on 15 May 2021; and
the works of demolition on the building had started, so they could apply mixed use treatment combined with MDR (the option being non-residential and the property at completion counting as 17 dwellings in the process of construction).
Shinebrook failed on a number of grounds. Although there was some evidence of demolition work having started before completion of the purchase, there was no evidence of any construction of the new building for the 17 flats. (Photographs without date stamps were of little evidential value.)
Also, it was not correct to analyse the purchase as a single transaction in order to calculate the tax (Shinebrook were trying to take advantage of the rule that the 3% surcharge does not apply to a single mixed property transaction, even where MDR is claimed). Rather, the option was a chargeable transaction in its own right, with the two transactions being linked.
Those advising on SDLT might find particularly interesting the following parts of the judgment:
[129]: this says there must be some physical manifestation of what is to become the new building for the ‘in the process of construction’ rule to apply, applying Ladson [2022] UKUT 301 (TCC) (the case had been stayed pending the Upper Tribunal’s ruling in Ladson);
[131]–[133]: this discusses the SDLT treatment of an option; and
[134]–[136]: this discusses linked transactions, interestingly saying at one point: ‘The Stamp Office appears to accept the principle that for transactions to be linked, there must be an attempt to split a composite transaction to secure an SDLT advantage.’ This has been criticised as being far too narrow a formulation. For example, it is common for commercial property lettings to be dealt with as a number of separate lease documents for good commercial reasons. Here, the parties do not want separate documents in order to secure an SDLT advantage, but the circumstances of the transactions might well indicate the leases are linked. For example, there can be separate leases of a building from one landlord and of an adjoining parking area from another landlord where the two landlords are ‘connected persons’ and the lessee would not have wanted to take one lease without the other.
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