Overview
A client sought advice in relation to the purchase of a holiday lodge. They had been advised that because the property was described as a caravan or lodge, no SDLT would be payable. Before completion, the client requested confirmation that this advice was correct.
The Challenge
The client faced conflicting advice regarding their SDLT liability:
- The property was described as a caravan or holiday lodge
- The client was advised that this meant SDLT would not apply
- On that basis SDLT of £0 had been assumed
- There was a risk that SDLT was being incorrectly overlooked
Our Approach
We reviewed the contract documentation, site agreements, and the physical characteristics of the property to determine whether it met the definition of a caravan for SDLT purposes. We assessed the degree of permanence, method of attachment, and the rights granted to the purchaser.
Applying HMRC guidance and relevant SDLT principles, we analysed whether the property qualified as exempt from SDLT or whether it constituted a chargeable interest in land. Our review concluded that despite being marketed as a lodge, the property did not fall within the caravan exemption.
The Outcome
The client was able to proceed with the transaction fully informed of the correct SDLT position. By identifying the SDLT liability in advance, the client avoided the risk of an underpaid return, penalties, and interest arising after completion.
Key Results
- The property did not qualify for the caravan exemption
- SDLT was correctly chargeable on the purchase
- SDLT liability confirmed at £13,500
- Incorrect advice of £0 SDLT was avoided
Conclusion
This case demonstrates the importance of looking beyond labels such as caravan or lodge and assessing the legal and physical reality of the property. A detailed review of the documentation ensured SDLT was applied correctly and protected the client from future HMRC challenge.
