Scope: How much is chargeable: Fixtures and fittings
For an item to be regarded as a fixture or part of the land and therefore chargeable to tax, as opposed to a chattel or moveable in Scotland which is not chargeable, it must be annexed to the property.
The issue will then turn on the degree and purpose of the annexation, with emphasis being placed in many cases to purpose.
Where a purchaser agrees to buy a property for a price that includes an amount properly attributed to chattels or moveables, that amount will not be charged to Stamp Duty Land Tax (SDLT).
The purchaser is responsible for the accurate completion of their land transaction return, including the entry for the consideration of the land transaction at box 10 in form SDLT1.
By virtue of FA03/SCH4/PARA4 a just and reasonable apportionment is required where a price is paid partly for a land transaction and partly for a non-land transaction such as the purchase of chattels.
It does not matter that the parties to a transaction may agree a particular apportionment which is then documented in the contract. The apportionment will not be correct unless it was arrived at on a just and reasonable basis.
HM Revenue & Customs has the right to make enquiries into the accuracy of a land transaction return. See SDLTM80010+.
The apportionment of the purchase price may well be one aspect on which an enquiry may be opened.
Similarly it is quite possible that we will also undertake enquiries into cases where a deduction has been made for chattels to confirm that those items properly fall within the definition of chattels.
HM Revenue & Customs is unable to provide a comprehensive list of items that are accepted as chattels or moveables. This is because each case must be considered on its own merits and because this is an area of the law that continues to evolve.
The following items are, however, confirmed as being assets that will normally be regarded as chattels
- carpets (fitted or otherwise)
- curtains and blinds
- free standing furniture
- kitchen white goods
- electric and gas fires (provided that they can be removed by disconnection from the power supply without causing damage to the property)
- light shades and fittings (unless recessed).
On the other hand, the following items will not normally be regarded as chattels
- fitted kitchen units, cupboards and sinks
- agas and wall mounted ovens
- fitted bathroom sanitary ware
- central heating systems
- intruder alarm systems.
Externally, any plants, shrubs or trees growing in the soil which forms part of the land, are not to be regarded as chattels.
A deduction would, however, be appropriate for amounts properly apportioned to any plants growing in pots or containers.
The above guidance is written primarily in the context of sales of residential property.
HM Revenue & Customs is advised that the same principles will apply when considering the purchase of industrial or commercial property in which the sale may also involve the acquisition of plant, machinery or equipment.
The question of whether plant or machinery is a fixture or a chattel is determined in the same way as for any other asset.
In particular tenants fixtures in England, Wales and Northern Ireland are fixtures and therefore part of the land, notwithstanding that a tenant may have a right to sever them.
The tenant’s right of severance is also a chargeable interest within the meaning of FA03/S48(1).
While each case depends on its own facts it is unlikely that plant or machinery that can be relatively easily severed from the property to which it is fixed, for example by the simple expedient of removing some bolts securing it to the floor or walls, will be a fixture.
Alternatively heavy plant or machinery that is integral to a building, or plant or machinery whose removal would damage the building or land, is likely to be a fixture.
It follows therefore that escalators and elevators, boilers, furnaces, walk-in refrigerators and restaurant cooking stations are likely to be fixtures.
SDLT treatment of trees growing on land
HMRC have been asked if there has been a change in HMRC’s view about whether trees growing on commercial forestry land are to be treated as part of the land and, therefore, whether any consideration given in respect of them when the land changes hands is to be treated as chargeable consideration for SDLT purposes.
HMRC can confirm that there has been no change. HMRC’s view is based on general land law principles established by case law, principally CIR v Pilcher  All ER 1097. There is a useful summary of the arguments at BIM35410. HMRC understand that similar principles apply in Scotland to those which apply in England and Wales.
Broadly, trees growing in the soil (including any fruit growing on them) constitute part of the land, while the normal annual crops of an arable farm, felled timber and plants or trees growing in pots do not.
HMRC have also been asked whether faster-growing trees such as Christmas trees can be treated as crops. In our view, if such trees are growing in the soil (rather than in a pot) they will still be treated as part of the land.