Tribunal upholds strict deadlines despite perceived unfairness

Each of the UK’s home nations now operates its own property transaction tax: Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land Transaction Tax (LTT) in Wales, and Land and Buildings Transaction Tax (LBTT) in Scotland. All three regimes include a surcharge for additional residential properties - commonly known as the ‘second home’ surcharge - though rates and scope vary. A universal feature is the ability to reclaim this surcharge if a taxpayer sells their previous main residence within a prescribed period after acquiring the new one.

Crucially, each nation sets its own timeframe for selling the old home. SDLT and LTT provide a three-year window, with limited ‘exceptional circumstances’ provisions allowing the relevant tax authority to extend the limit in narrowly defined scenarios, such as fire safety defects or public authority restrictions (now legislated for in Wales for clarity). Scotland, however, provides no discretion for Revenue Scotland to extend this limit and only recently increased its period from 18 months to three years. These stricter conditions provided the backdrop for the Bredin case.

In Bredin, the taxpayer purchased a new main residence, paying the LBTT Additional Dwelling Supplement (ADS), intending to sell their previous home within the then 18-month window. Due to market conditions, the sale unfortunately completed just 13 days after the deadline. The taxpayer sought an ADS refund, arguing unfairness, but Revenue Scotland refused, citing the strict statutory time limit. The Tribunal dismissed the appeal, holding that the statutory time limits in the legislation were clear. The legislation did not give discretion to the Tribunal over the application of these time limits, regardless of harshness. The judge acknowledged the taxpayer’s frustration but emphasised that the Tribunal’s powers are strictly limited by statute as established in the Upper Tribunal decision of HMRC v Hok UKUT 363 (TCC). The judge further stated at paragraph 30 that the law “does not give the Tribunal or Revenue Scotland the jurisdiction to consider whether there was a reasonable excuse for the delay in selling; the timescale is either met, or it is not.”

Bredin is not unique. In White v RS [2024] FTSTC 7, another LBTT ADS case, the Tribunal reaffirmed that it could not consider fairness or extend statutory deadlines, even in extenuating circumstances. Similarly, Secure Service Ltd v HMRC UKFTT 59 (TC) refused a late SDLT multiple dwellings relief claim, confirming the 12-month amendment window is absolute and cannot be circumvented by appealing to fairness.

It should be noted that while the home nations all hold discretionary powers for tax collection and management, these are tightly regulated by case law. HMRC, for example, make it clear in their guidance at ADML3200 that they “must apply the law correctly and cannot choose to move away from this position merely because the result seems unfair or unreasonable.”

These cases serve as a warning: Tribunals may not be able to assist taxpayers who miss clear statutory time limits where there is no legislative ability to do so, regardless of compelling circumstances. Therefore, taxpayers and their advisers should ensure that strict time limits are complied with.

In some circumstances, judicial review can examine whether a tax authority’s application of the law is unlawfully unreasonable. The Courts may, for example, be able to consider whether a tax authority has an extra statutory discretion to allow a claim out of time. But this requires specialist advice and it is better for taxpayers not to find themselves in that situation in the first place.

In summary, Bredin and similar cases clearly show that statutory time limits in property tax regimes are strictly enforced and should be taken seriously. Taxpayers must act promptly or risk financial loss.