Large houses set amidst rolling acres are an abiding feature of English rural life – but should such properties necessarily be viewed as wholly residential? In answering that question in a landowner's favour, the First-tier Tribunal (FTT) relieved him of a substantial Stamp Duty Land Tax (SDLT) demand.

The landowner and his wife purchased a house and 39 acres of land for £2.5 million. He paid £114,500 in SDLT on the transaction on the basis that the property was in mixed use. HM Revenue and Customs (HMRC), however, took the view that the property was entirely residential and assessed him for an additional £98,000 in SDLT.

Upholding the landowner's challenge to that assessment, the FTT noted that 20 acres of the land were fenced off, invisible from the house and leased out for grazing sheep. That arrangement long pre-dated the couple's purchase of the property. A further 8.5 acres of woodland were managed by the Woodland Trust.

It was somewhat hyperbolic to describe the house as surrounded by its own rolling pasture and indigenous woodland. It was, in truth, a barn conversion, not a large manor house at the heart of a traditional rural estate. Given its character, it was more than adequately served by its 12 adjoining acres, which included a landscaped garden, a lake and various outhouses.

The FTT found that the land occupied under the grazing lease and by the Woodland Trust did not form part of the garden or grounds of the house as defined by Section 116 of the Finance Act 2003. It was, therefore, wrong to treat them as residential property for the purposes of SDLT.