Lorraine Hayes v The Welsh Revenue Authority

The Appellant submits that her involvement in the purchase and ownership of the Property was simply a “paper exercise” to enable her daughter to buy the Property. Her daughter did not, on her own, meet the affordability requirements to obtain the necessary mortgage and therefore the mortgage company required Mrs Hayes to become a borrower on the mortgage as well.

She never had any real interest in the Property and, as soon as her daughter’s affordability requirements had improved, she would come off both the mortgage and the deeds of the property.

She does not have any beneficial interest in the property and has offered to get this in writing from lawyers.

The estate agent and mortgage advisor did not advise her that there may have been alternative ways of achieving the desired outcome (such as possibly a joint borrower sole proprietor mortgage).

The position in England was different and she would have been entitled to a refund if the transaction had taken place in England.

The WRA have not looked at her particular case on an individual basis, but rather treated her as if she were buying a second home and this is not fair. No common sense has been applied to recognise that not all cases are the same.

If she had bought and sold a main residence within three years, she would have been entitled to a refund of the additional rates tax, so she feels that an equivalent provision should apply to her being on the mortgage and property register for two years.

WRA submit that the procedural requirements have been met, specifically:

WRA submit that the purchase of the Property is subject to the higher rates of LTT because:

With regards to the purpose of the legislation and the Appellant’s assertions that it is unfair and does not take account of a parent trying to help their child, WRA submit that the statute is unambiguous and the transaction that took place clearly falls within the scope of the legislative provisions. On that basis, there is no need to have recourse to the purpose behind the legislation.

Even if the purpose of the legislation were relevant to the interpretation of this provision, the WRA believe that it was intended to apply to circumstances such as Mrs Hayes, because the higher rates provisions were intended to capture purchases of second residential properties where a person already owns one residential property, and has no intention to dispose of it. Furthermore, the Senedd made express provision for the higher rates provisions to apply in cases where there are joint buyers if one of them would be liable to the higher residential rates of LTT.

Finally, WRA submits that the legislation that may or may not apply in England is not relevant to this case.

It became clear during the course of Mrs Hayes’ submissions that there was no dispute at all about the way in which the law, as set out above, applied to the Transaction. She accepted that, as the law stands, the transaction was a higher rates residential transaction giving rise to a sum of LTT of £5,440.

The way in which this appeal has come about are a little unusual, in the sense that the original return (when combined with the first amendment to reflect the fact that it was a joint purchase) showed a higher rates transaction and the LTT was paid at that time.

In response to questions during the hearing, Mrs Hayes acknowledged that she had been aware of the higher rates transaction applying before the completion of the purchase because the mortgage adviser had told her.

Since she could not appeal her own return, she needed to amend the return, as she did in January 2022, and then WRA issued a closure notice to revert the position to the one originally submitted.

It may have been possible to structure the transaction in a different way, for example through a different type of mortgage or a guarantee arrangement, that would not have given rise to the fact that Mrs Hayes became a legal owner of the Property (although we express no view on what the LTT consequences of any alternatives would have been). However, this is not what happened, and we can only apply the law to the facts as found.

Mrs Hayes asserted both in correspondence and at the hearing that she did not have any beneficial interest in the Property. She also accepted that she did not have any documentary evidence to support that position and had not followed through on her offer to the WRA earlier in correspondence to get a solicitor to draw up a document to confirm it.

To the contrary, the evidence shows that she is the joint owner of the Property at the Land Registry and no specific arrangements have been shown that would alter the usual beneficial ownership consequences of that title.

We find that the transaction was a higher rates transaction in accordance with LTTA 2017.

Mrs Hayes’s frustrations are mainly aimed at:

As we expressed at the hearing, these are frustrations that are outside the scope of our power. This Tribunal is a creature of statute, and we only have the power, on an appeal against an amendment in a closure notice relating to LTT to affirm, vary or cancel the WRA’s decision as to whether Mrs Hayes is chargeable to the tax and/or the amount of the tax (by virtue of sections 172 and 181 of the TCMWA 2018).

We do not have the power to consider whether the policy for LTT higher rates transactions is fair or morally right.

For completeness, we would agree with the WRA that the potential refund if the transaction had taken place in England is not relevant (and we do not express any opinion on whether such a refund would or would not have applied).

Mrs Hayes confirmed that she was not seeking to rely on the replacement of main residence provisions, but was rather drawing an analogy with her position, particularly in light of her short period of ownership. Again, any consideration of this question would be straying into policy which is outside the scope of the appeal.

For the reasons set out above, we refuse Mrs Hayes appeal.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.