Claims that a property was not suitable for use as a dwelling
The legal test is strict. In Mudan v HMRC [2025] EWCA Civ 799, the Court of Appeal confirmed that a property remains a dwelling unless, at the date of purchase, it had lost its fundamental characteristics as a dwelling. Ordinary disrepair, however severe, is not enough. Very few properties qualify.
Dwelling Identity Checker
This tool gives a rough first view of whether a claim that your property was "not suitable for use as a dwelling" could even be arguable under the legal test set by the Court of Appeal. Answer for the condition of the building at the date of purchase. The result is not advice, and it cannot tell you that a claim will succeed.
The Legal Test: Mudan v HMRC [2025] EWCA Civ 799
The Court of Appeal unanimously endorsed the Upper Tribunal's 7-point framework. The test is not whether the property is habitable, safe, or ready for occupation. It is whether the building has lost its fundamental characteristics — its identity — as a dwelling.
Lord Justice Lewison held (at para 69) that the UT's general principles were "legally sound, practical, workable, and reflect the intention of Parliament."
The key distinction (UT at para 54(2), endorsed by the Court of Appeal):
- "A desirable house which has become dilapidated" — still a dwelling, even if dangerous, uninhabitable, or requiring complete renovation
- "An empty shell with no main roof" — no longer a dwelling; identity lost
Critical points from the judgment:
- Previous use as a dwelling is a "very strong indication" that the building possesses dwelling characteristics (UT para 54(1))
- The definition is concerned with the building, not its internal fit-out (Court of Appeal para 63)
- Unsafe occupation (e.g. dangerous electrics) is a relevant factor but does not by itself render the building unsuitable (UT para 54(5))
- Defects must be assessed for whether they are capable of remedy — if works would be so dangerous or hazardous as to prejudice their viability (as in Bewley, where asbestos prevented repair), the building is unlikely to remain suitable (UT para 54(4))
- The court is not restricted to a snapshot on the completion date — past history and whether the building retains its identity are relevant (Court of Appeal paras 58, 66)
What counts as "not suitable for use as a dwelling"?
Following the Court of Appeal's judgment in Mudan v HMRC [2025], the legal test is strict. A property remains a dwelling unless it has lost its fundamental characteristics as a residential building. This is very different from normal renovation or modernisation — rewiring, plumbing, or cosmetic work do not meet the threshold.
A claim may be arguable only if, at the date of completion, the building had:
• Collapsing or unsafe floors, walls, or roof structure
• A missing or severely compromised roof
• Dangerous contamination such as asbestos preventing repair
• A legal prohibition on occupation (e.g. Dangerous Structure Notice) (depending on its terms)
• Been effectively reduced to an empty shell
Even then, the tax authority is likely to challenge the claim, and strong independent evidence from the time of purchase is essential.
Important: Damp, mould, broken windows, dangerous electrics, or lack of a boiler are "background" issues. Under Mudan, they do not stop a property being a dwelling unless they have caused the structure to collapse.
We are very selective about the cases we submit. HMRC is actively challenging poorly evidenced claims and scrutinising both taxpayers and agents for incorrect or speculative filings.




