The First-tier Tribunal (Tax Chamber) released its decision in White & Kane v HMRC on 29 September 2023, with the citation [2023] UKFTT 866 (TC) and the case reference TC08943. Tribunal Judge Anne Fairpo presided, sitting with Member Shaneem Akhtar. The decision is published at caselaw.nationalarchives.gov.uk/ukftt/tc/2023/866. The case is widely referred to in tax-press summaries and competitor SEO coverage as the 'Horton Hall' SDLT case after the property at the centre of the dispute, a country house in Staffordshire. The Tribunal dismissed the appellants' SDLT mixed-use claim on the purchase of the estate and confirmed residential rates under FA 2003 s.55 Table A. This page is the dedicated deep-dive on White & Kane: the statutory framework, the functional appendage test the Tribunal articulated and applied, the specific findings on the disputed fields, the place of the decision in the wider post-Hyman case-law line, and the practical implications for buyers of country-house estates evaluating mixed-use claims.

The Horton Hall fact pattern and the procedural history

Mark White and Carol Kane purchased Horton Hall, a country house in Staffordshire, together with adjoining land including fields. On the SDLT return filed by the conveyancer at completion, the buyers claimed mixed-use treatment under FA 2003 s.55 Table B, on the basis that the adjoining fields were non-residential and brought the whole transaction outside the residential property definition in FA 2003 s.116. The mixed-use treatment, if successful, would have applied the lower Table B rates to the whole transaction and disapplied the 5% additional dwellings surcharge under Schedule 4ZA (the surcharge applies only to residential transactions).

HMRC opened an enquiry into the SDLT return under FA 2003 Schedule 10 paragraph 12 and issued a closure notice maintaining residential treatment. The appellants appealed under Schedule 10 paragraph 35. The First-tier Tribunal heard the appeal and released its decision on 29 September 2023, dismissing the appeal. The Tribunal applied the FA 2003 s.116(1)(b) garden-or-grounds limb to the fact pattern and concluded that the adjoining fields were grounds of the residential dwelling.

The statutory framework: FA 2003 s.116

FA 2003 s.116 defines residential property by reference to three sub-paragraphs:

  • s.116(1)(a): a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use;
  • s.116(1)(b): land that is or forms part of the garden or grounds of a building within paragraph (a) (including any building or structure on such land);
  • s.116(1)(c): an interest in or right over land that subsists for the benefit of a building within paragraph (a) or of land within paragraph (b).

Verbatim text at legislation.gov.uk/ukpga/2003/14/section/116 (verified 2026-05-26). The Horton Hall dispute centred on s.116(1)(b): whether the disputed fields were grounds of the main dwelling. Where the answer is yes, the fields are residential property and the transaction is residential. Where the answer is no, the fields are non-residential and the transaction is mixed-use. The sub-paragraph (b) test has generated a substantial body of FTT and Upper Tribunal case-law since the Court of Appeal decision in Hyman v HMRC [2022] EWCA Civ 185.

The functional appendage test

At paragraph 19 of White & Kane, Tribunal Judge Anne Fairpo articulated the functional test for the s.116(1)(b) grounds limb. The proposition is that adjoining land is grounds where it serves the dwelling as an appendage rather than having a self-standing function. The test is purposive and fact-specific: the Tribunal looks at how the land is used, how it relates physically and functionally to the main dwelling, and whether the land has a commercial or other non-residential use that gives it a self-standing function separate from the residential use.

The two limbs of the test work together. Where the land's use is to enhance the residential enjoyment of the dwelling (amenity, privacy, view, recreational use by the owner, ornamental landscaping), the land is an appendage and falls within grounds. Where the land has a genuine commercial use that gives it economic activity independent of the dwelling (commercial farming with contracted output, let commercial workshops, commercial forestry, formal paddock grazing licences with third-party rent), the land has a self-standing function and may fall outside grounds.

The functional appendage test in White & Kane is an application of the controlling Hyman line of authority. In Hyman v HMRC [2022] EWCA Civ 185, the Court of Appeal applied a purposive reading of s.116(1)(b) and rejected the appellants' argument that the test should be a narrow physical-proximity test. The Upper Tribunal in The How Development 1 Ltd v HMRC [2023] UKUT 84 (TCC) developed the test further with reference to the character and use of the disputed land. White & Kane is the FTT-level application of these principles to a country-estate fact pattern with adjoining fields.

The Tribunal's findings on the Horton Hall fields

At paragraph 32 of the decision, the Tribunal recorded its conclusion that the Horton Hall fields were 'functionally, occupied with and were appendages' to the dwelling. The phrasing tracks the functional appendage test from paragraph 19. The fields were physically adjoining the main house, the use was consistent with private enjoyment by the dwelling owner, and there was no evidence of a self-standing commercial function that would have displaced the appendage character. The Tribunal did not find that the appellants had produced sufficient evidence of measurable commercial activity on the fields to bring them outside the grounds limb.

At paragraph 34, the Tribunal dismissed the appeal: the fields were held to be residential property forming part of the grounds of the main dwelling, and the transaction was a residential transaction for SDLT purposes. The closure notice stood.

The decision is a straightforward application of the Hyman / How Development test to a country-estate fact pattern. There was no novel doctrinal expansion. The reasoning is consistent with the orthodox post-Hyman line: the FTT applies the functional appendage test, the appellants bear the evidential burden of establishing a self-standing commercial use, and absent that evidence, the residential characterisation prevails.

The place of the decision in the wider FA 2003 s.116 case-law

The FA 2003 s.116 residential / non-residential boundary has been the subject of a connected line of FTT and Upper Tribunal decisions since 2019. The controlling authorities are:

  • Hyman v HMRC [2022] EWCA Civ 185: Court of Appeal. The CA confirmed the Upper Tribunal's purposive reading of s.116(1)(b) and held that the test is to look at the character and use of the land, not at narrow physical proximity. The decision is the controlling case-law-level authority on the grounds limb.
  • The How Development 1 Ltd v HMRC [2023] UKUT 84 (TCC): Upper Tribunal. The leading UT application of the Hyman test. The UT developed the analytical framework for assessing whether disputed land is grounds, with reference to the character of the use and the presence or absence of self-standing function.
  • Suterwalla v HMRC [2024] UKUT 188 (TCC): Upper Tribunal. The UT held that the FTT had misapplied the test on a paddock-with-grazing-licence fact pattern and allowed the appellants' mixed-use claim. Suterwalla is the narrow outlier in the otherwise narrowing line: it confirms that where a formal commercial arrangement (a paddock grazing licence with third-party rent) gives the land a measurable self-standing commercial function, the appendage character can be displaced.

FTT-level authorities in the same line include Hyman v HMRC [2019] UKFTT 469 (the FTT decision below the UT and CA appeals), Mudan v HMRC [2023] UKFTT 317 (state of disrepair alone does not move a property out of residential treatment), MHB Ltd v HMRC, and Brown v HMRC [2024] UKFTT. White & Kane sits squarely in this orthodox line. The wider trilogy of mixed-use SDLT case-law (Hyman / Suterwalla / Horton Hall) is summarised on our SDLT mixed-use trilogy page.

The contrast with Suterwalla v HMRC

Suterwalla v HMRC [2024] UKUT 188 (TCC) is the Upper Tribunal decision in which the appellants were granted mixed-use treatment on a fact pattern involving a paddock with a formal grazing licence let to a third party. The Upper Tribunal held that the FTT had misapplied the functional test and that the grazing licence created a measurable commercial use of the paddock that gave it a self-standing function separate from the residential use of the main dwelling.

The contrast between Suterwalla and White & Kane is instructive. It is not the size, location, or character of the land that decides mixed-use treatment. It is the presence or absence of a measurable, self-standing commercial function. Suterwalla had a formal commercial arrangement on identifiable land (the grazing licence, with a third-party grazier, with rent, with terms). White & Kane had adjoining fields used in a way consistent with the residential enjoyment of the dwelling, without an equivalent commercial arrangement.

Country-estate buyers who hope to position their fact pattern under Suterwalla need to identify the specific commercial-use arrangements on identified parts of the land and produce the evidence (formal licences or leases, rent records, third-party identities, periods of operation). Generic large-estate, "we have fields and outbuildings" arguments without this evidence will fall on the White & Kane / orthodox side of the line.

The SDLT cost differential at country-estate values

The financial incentive for taxpayers to pursue mixed-use claims at country-estate values is substantial. For an illustrative £5 million purchase by a buyer attracting the 5% additional dwellings surcharge under FA 2003 Schedule 4ZA:

  • Residential SDLT under Table A: 0% on £125,000 + 2% on £125,000 (£2,500) + 5% on £675,000 (£33,750) + 10% on £575,000 (£57,500) + 12% on £3,500,000 (£420,000) = £513,750.
  • Plus 5% additional dwellings surcharge under Schedule 4ZA: 5% × £5,000,000 = £250,000.
  • Total residential SDLT with surcharge: £763,750.
  • Mixed-use SDLT under Table B: 0% on £150,000 + 2% on £100,000 (£2,000) + 5% on £4,750,000 (£237,500) = £239,500 (surcharge does not apply).
  • Differential: £524,250.

The 5% surcharge rate is the rate in force from 31 October 2024 (FA 2025 s.51); it replaced the earlier 3% rate. The differential is large enough that taxpayers continue to pursue mixed-use claims even against the narrowing FTT line. The case-law line confirms the speculative claim does not succeed without genuinely commercial-use evidence.

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HMRC's enquiry posture on country-estate mixed-use claims

HMRC's enquiry strategy on country-estate mixed-use claims has been consistent since Hyman v HMRC [2022] EWCA Civ 185. HMRC routinely opens enquiries under FA 2003 Schedule 10 paragraph 12 within nine months of the SDLT filing date, applies the Hyman / How Development functional appendage test, and maintains residential treatment unless genuine commercial-use evidence is produced. Discovery powers under Schedule 10 paragraph 28 allow HMRC to reach further back in time where there has been careless or deliberate behaviour. The Tribunal success rate for taxpayers across the post-Hyman line has been low; Suterwalla is the narrow exception.

For a buyer facing an enquiry, the immediate steps are: (i) collect the evidence on the use of each part of the land at the effective date of the transaction (and ideally for a period before and after); (ii) identify whether any genuinely commercial-use arrangements were in place (formal licences, leases, contracts, third-party rent); (iii) take independent professional advice from a tax adviser with country-estate SDLT specialism; (iv) consider whether the procedural position (closure-notice timing, review options under FA 2003 Schedule 10A) creates any further levers.

Cost of an unsuccessful claim

An unsuccessful mixed-use claim carries three direct cost elements:

  1. The original residential SDLT figure stands. This includes the rate differential between Table A and Table B (which in the £5 million example is approximately £274,000) and the additional dwellings surcharge under Schedule 4ZA where applicable (£250,000 in the example). Interest under FA 2003 s.87 accrues from the original tax-due date through the dispute period.
  2. Penalty exposure under FA 2007 Schedule 24. Where HMRC contends the original SDLT return was careless, penalties of up to 30% of the under-declared SDLT can apply. Deliberate not-concealed: up to 70%. Deliberate and concealed: up to 100%. The penalty regime sits on the substantive side of the analysis and is separate from the procedural appeal position.
  3. Procedural costs. Adviser fees through the enquiry and any subsequent FTT appeal. In Default-procedure cases each side bears its own costs; in Complex-procedure cases the losing party may face a costs order. Where the buyer engaged a refund-claim firm on a contingent-fee basis, the firm's fees are typically charged regardless of outcome and are a separate cost.

The risk-adjusted expected value of a speculative mixed-use claim on a country-estate fact pattern without genuinely commercial-use evidence is poor: low probability of success on the FTT case-law line, material downside if unsuccessful.

Practical lessons for country-house estate buyers

Three takeaways from White & Kane and the wider post-Hyman line:

  1. Model SDLT on the residential basis at the purchasing-decision stage. Treat any potential mixed-use saving as a contingent upside subject to significant FTT risk; do not assume it as a planning baseline. The asking price, mortgage capacity, and completion budget should all be modelled against the residential SDLT figure (plus the 5% surcharge under Schedule 4ZA where applicable). If a mixed-use saving materialises later, it is upside; if it does not, the planning position holds.
  2. If a mixed-use argument is pursued, build the evidential foundation specifically. Identify the third-party economic activity on identifiable parts of the land. Document the commercial arrangement (formal licence, lease, or contract). Record the rent. Identify the third party and the period of operation. Suterwalla succeeded on this evidential basis; White & Kane and the orthodox line failed without it. Generic large-estate arguments are losing arguments.
  3. Seek independent professional advice. A tax adviser engaged directly by the buyer has an incentive to give a realistic assessment of the FTT risk; an SDLT-refund-claim firm engaged on a contingent-fee basis has an incentive to maximise claim volume. The two perspectives produce different recommendations. For a country-house transaction at £2 million and above, the difference in advice quality is material to the financial outcome. Read our SDLT refund scams page for the wider pattern of speculative claim marketing on country-estate transactions.

Statutory references

  • FA 2003 s.116 "Meaning of 'residential property'": legislation.gov.uk/ukpga/2003/14/section/116 (verified 2026-05-26). Sub-paragraph (1)(b) is the operative grounds limb for White & Kane.
  • FA 2003 s.55 Tables A and B (residential vs non-residential / mixed-use rates): legislation.gov.uk/ukpga/2003/14/section/55
  • FA 2003 Schedule 4ZA "Higher rates for additional dwellings" (5% surcharge rate from 31 October 2024 per FA 2025 s.51): legislation.gov.uk/ukpga/2003/14/schedule/4ZA
  • FA 2003 Schedule 10 paragraphs 12, 28, 29, 35 (enquiry, closure notice, assessment, appeal): legislation.gov.uk/ukpga/2003/14/schedule/10
  • FA 2003 s.87 (Interest on unpaid tax).
  • FA 2007 Schedule 24 (Penalty regime for inaccuracies in documents).
  • White & Kane v HMRC [2023] UKFTT 866 (TC) (TC08943, 29 September 2023, Tribunal Judge Anne Fairpo with Member Shaneem Akhtar): caselaw.nationalarchives.gov.uk/ukftt/tc/2023/866
  • Hyman v HMRC [2022] EWCA Civ 185: Court of Appeal controlling authority on FA 2003 s.116(1)(b) grounds limb.
  • The How Development 1 Ltd v HMRC [2023] UKUT 84 (TCC): Upper Tribunal leading application of the Hyman test.
  • Suterwalla v HMRC [2024] UKUT 188 (TCC): Upper Tribunal authority on paddock-with-grazing-licence sub-line.
  • HMRC SDLT Manual SDLTM00385+ "Gardens and grounds": gov.uk SDLTM00385
  • HMRC SDLT Manual SDLTM00370+ "Residential property definition": gov.uk SDLTM00370