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Multiple Dwellings Relief (“MDR”) offers relief for residential property transactions where the transaction consists of two or more self-contained dwellings – typical cases will involve a residential property which has a connected or unconnected annex.
What is a Self-Contained Dwelling?
For a self-contained annex to qualify as a dwelling, it will need to be:
If the self-contained annex is actually being occupied as a self-contained dwelling then it will almost certainly qualify for relief.
If the self-contained annex is not being occupied, then you will need to demonstrate that it is suitable for use as a dwelling.
What are the key factors?
In order for a self-contained annex to qualify as a dwelling, it will need to have the facilities to provide the basic living necessities such as facilities for personal hygiene, consumption of food and drink, storage of personal belongings and a place to sleep.
As such, the prima facie indicators that a self-contained annex will qualify as a dwelling as such include:
Whilst, these might be the minimum criteria required, it is not always conclusive. For instance, a number of self-contained dwellings may share a kitchen.
What else do I need to think about?
Recent case law has illustrated that one must take a realistic approach when determining whether a self-contained annex may qualify for relief. With this in mind, other factors which may prove useful / detrimental in a claim for MDR may include:
Do I Have a Self-Contained Dwelling?
Due to the way the legislation is drafted, there is no checklist of criteria or conditions which allows scope for a judgement call. Ultimately, it will be a case of weighing up all of the factors and taking a reasonable and balanced view based on the physical attributes of the property.
This can therefore be a subjective process and determining whether or not an annex qualifies as a dwelling for MDR purposes may subject taxpayers to queries from HMRC given it is in HMRCs best interests that the annex does not qualify as a dwelling!
How can ETC Help?
ETC Tax are qualified and specialist tax advisers who have helped a number of clients make successful claims for MDR. With HMRC actively challenging MDR claims, it would be worth getting advice from a specialist who is familiar with the existing and growing case law and can present the best possible case for a claim.
If you think you may have grounds for a claim, please do not hesitate to get in touch. We are happy to review your circumstances and provide our initial thoughts on the prospects of an MDR claim.
Call or email us any time or, simply fill out the contact form below and a member of our team will be in touch.