A couple have lost a claim for a £104,000 stamp duty land tax (SDLT) refund as part of their 22-acre property used by ‘troublesome cattle’, deemed not to be mixed-use.

Martin and Julia Lynch purchased property overlooking the Vale of Aylesbury consisting of a large house, a converted barn, a cottage and 22 acres of land for £3,075m on 7 May 2021, paying £258,750 SDLT with multiple dwellings relief applied.

In May 2022 the Lynchs’ lawyers, Womble Bond Dickinson claimed for overpaid tax under paragraph 34 of Schedule 10 Finance Act 2003, claiming back £104,433 due to mixed use.

However, this claim was rejected by HMRC, which issued a closure notice stating that no refund was due.

At the First Tier Tribunal (FTT), the Lynchs claimed that 18 acres of the land was being used to graze cattle, deeming this portion of the property liable to the mixed use relief.

Section 116 of Schedule 4ZA determines the definition of a residential property, with paragraph b in this section being the determining factor, stating ‘land that is or forms part of the garden or grounds of a building’.

The estate agents’ sales brochure for the property stated that a large portion of the ground was rented out to a farmer, adding that the 22 acres of land was for the use of the owner, which ultimately means the cattle did not have to be there.

In addition, the written agreement between the previous owner and Mr Watts, the owner of the cattle, had expired in 2019, but Mrs Lynch stated the cattle were there when viewing the property and at the time of completion.

The property description stated: “The rear of the property comprises a small patio area, with steps leading to the extensive 18-acre grounds… a large asset to the Main House, perfectly adequate to support the development of the existing dwelling.”

After completion no new contract was agreed but Mr Lynch had to ask the owner of the cattle to remove them due to them being ‘troublesome’, as warned by some neighbours. This took place two months after the completion of the property.

Tribunal judge Marilyn McKeever and judge Duncan McBride found the 18 acres of land to be on the same grounds as the main house.

McKeever said: “The land was not used for a purpose so separate and unconnected with the use of the dwelling as such as to take it out of the definition of “grounds”. In particular, Mr Watts’ use for grazing his cattle did not prevent the appellants from using the grazing land as grounds of their dwelling.

“As the grazing land is part of the garden or grounds of the dwelling, it is residential land, which means that the property was wholly residential at the effective date of the transaction.”

The appeal was dismissed finding the couple to have paid the correct amount of stamp duty in the first place as mixed-use had not been deducted initially.