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2025UT30
Ref: UTS/AP/24/0139
DECISION OF
Sheriff McCartney
ON AN APPLICATION TO APPEAL
IN THE CASE OF
Mr A
Appellant
- and -
Shetland Islands Council
Respondent
FTS Case Reference: FTS/LTC/CT/24/00433
12 May 2025
Decision
[1]
The appeal is upheld and the case remitted to the First-tier Tribunal for the appeal to
be considered anew.
Introduction
[2]
This is an appeal against the decision of 7 October 2024 of the First-tier Tribunal for
Scotland (FTS). That appeal arose because Mr A was unhappy that Shetland Islands
Council (`the Council') had deemed the property he and his wife own in Shetland as a
second home and thus subject to a council tax premium. Mr A was unsuccessful before the
FTS, and now appeals to the Upper Tribunal for Scotland.
[3]
The issue arises because Mr A and his family are abroad due to Mr A's working
arrangements. The decision is anonymised given the property is empty for at least part of
the time, and thus identifying details of the property should not be published.
Grounds of appeal
[4]
Mr A has a number of grounds of appeal. His application for permission to appeal
refers to several points, including an error in general law, an error in the application of the
law to the facts, an unfair procedure and that the FTS reached a decision that no reasonable
tribunal could reach. He separately complained the FTS had taken information into account
after the hearing which was unfair. His grounds of appeal did not specify the passages or
parts of the FTS decision said to be in error, other than a general criticism of the FTS for its
application of the caselaw to the facts.
[5]
A different judge in the FTS (from the judge who considered the substantive
hearing) determined Mr A's application for permission to appeal. That judge granted
permission to appeal. However, the permission to appeal did not deal with Mr A's ground
of unfairness (in that the FTS was said to have taken information into account after the
hearing). Parties agreed to take a pragmatic view and suggested that, if the FTS permission
to appeal decision was read as a whole, the UTS should assume that permission to appeal
had been granted on the fairness issue too. The UTS is grateful to the parties for that
consensus, and is content to do so.
Factual background
[6]
A summary of the factual background is that Mr A, his wife and their children spend
most of their time abroad. That is because of Mr A's employment. It is agreed they
purchased the property in Shetland on 5 November 2019. Mr & Mrs A's children attend
school in the country where Mr A works. Some time is spent at the property during holiday
periods. There is an intention for the family to live there full-time in due course, although
the timescale for that may be a matter of dispute. Beyond that, the facts established by the
FTS are unclear. For reasons explained below, this gives the UTS some difficulty in
determining the appeal.
The statutory framework
[7]
The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013
permitted local authorities to vary council tax charged on properties that are second homes.
Regulation 2 of The Council Tax (Variation for Unoccupied Dwellings) (Scotland).
Regulations 2013 define a second home as "a dwelling which is no one's sole or main
residence". Several cases have considered what "sole or main residence means", or similar
phrases. That caselaw is considered further below.
The FTS decision
[8]
The FTS held a hearing by Webex. It heard from Mr A and from Ms Johnston. The
decision narrates each parties' position, as provided to the FTS, in some detail. It made 7
findings in fact, all on formal and uncontroversial facts (such as on ownership of the
property, details of the council tax payable including the premium and that the Council told
Mr A of his right of appeal). The FTS' reasons are given at paragraphs 37-39 in brief terms.
It acknowledged the caselaw it considered, the evidence and to the documentary
productions without further explaining what specific evidence or documents it relied upon.
It considered Mr A worked and spent most of his time abroad.
The application for permission to appeal
[9]
The ground of appeal as granted by the FTS is broad. It is captured by paragraph 25
of the decision on permission to appeal, reading:
"the question for the Upper Tribunal may be whether the First-tier Tribunal
erred in its interpretation of the definition of second home contained within
the regulations, its interpretation of the concept of `main residence' and erred
in its application of the facts as agreed being applied to that definition."
[10] At paragraph 27 the FTS permission to appeal goes on to note "there may also be
wider interests in obtaining guidance from the Upper Tribunal on the interpretation of the
definition of `sole or main residence' as contained in the regulations."
[11] It is important that permission to appeal decisions are focused. An appellant should
be able to point to specific points or passages of the FTS decision explaining why the FTS
has made a legal error. The permission decision from the FTS or UTS should clearly identify
the legal point arising. The permission decision from the FTS does not explain in what way
the FTS erred in interpreting the definition of a second home, erred in its interpretation of
what is a main residence or how the facts as agreed should be applied to that definition.
[12] Notwithstanding that broad approach, Mr A provided helpful written submissions
to the UTS examining the caselaw in more detail.
Procedure before the UTS
[13] Due to Mr A working abroad, and for reasons beyond the UTS's control, both parties
were agreeable to the appeal being dealt with on the papers. However, that has caused
other issues. The FTS, whilst providing a well-written decision, only made seven findings
in fact.
[14] The importance of the range of findings in fact before the UTS arises because parties
are agreed that the legal test that should be applied is as set out in R (Williams) v Horsham
District Council [2004] 1 WLR 1137. That case concerned whether a teacher, who stayed in
accommodation provided by his school, had his sole or main residence at that
accommodation or at a property he owned throughout the period of his employment (and
to where he eventually returned to). The Court of Appeal considered it impossible to
produce a definition of main residence in all circumstances (paragraph 26). It considered
the test was what "a reasonable onlooker, with knowledge of the material facts, would
regard as that person's home at the material time". The Court of Appeal acknowledged that
would not always be an easy test to apply. But before such a test can be applied, there must
be a clear understanding of the material facts.
Decision whether there was an unfair process
[15] The issue of whether the FTS acted unfairly in accepting information after the
hearing is easily dealt with, and I deal with that first.
[16] The Council were represented before the FTS by Mr Hay. Ms Siobhan Johnston gave
evidence. Following the conclusion of the hearing, the Council sent a document to the FTS.
That document contained the evidence and submissions read out by Ms Johnston.
[17] There is no merit in this ground. I am satisfied from the submissions before the UTS
and from the FTS decision that what was submitted is nothing more than a written copy of
the statement read out by Ms Johnston at the FTS hearing. The FTS decision makes it clear
the document did not contain any new points but, in any event, the FTS relied on the oral
evidence of Ms Johnston (and presumably its own notes of that hearing). The appellant has
not been prejudiced in any way. This ground of appeal is refused.
Decision whether the FTS otherwise erred
[18] I have noted the broad basis on which the FTS granted leave to appeal and propose
to deal with all other matters under this heading.
[19] It is helpful to understand that although the Council had the power to vary council
tax due on second homes (and on long term empty homes) the Council did not choose to
impose that levy from the outset of the regulations coming into force. A decision was
subsequently taken to add additional council tax on second homes from 1 April 2024. At the
same time, the Council also made changes to the council tax payable on empty properties.
Those changes also came into effect as of 1 April 2024.
[20] Mr A submits that there is no definition of a main residence. He also points out
there is no prescriptive or absolute guidance on what "sole or main" residence means. In
one sense he is correct, but there is a wealth of case law. The question of what is someone's
"main residence", "sole or main residence" or similar phrases has arisen in cases concerning
not just council tax, but also in other settings such as land taxes and landlord and tenant
cases. The caselaw emphasises that what will be relevant may be wide ranging and will
depend on the facts and circumstances of each case.
[21] Parties do not submit that the reasonable onlooker test is incorrect. Rather Mr A
argues that the tribunal has erred in its application of this test to the facts of the FTS
decision.
[22] This is where the UTS finds itself in difficulty. Both parties appear to have set out
an extensive factual basis for why Mr A does or does not have his main home in Shetland.
The FTS decision records both sets of submissions between paragraphs 16 to 23 of its
decision. Some of those submissions referred to legal matters, but in the main the
submissions were on the factual position as to the property. The findings in fact do not help
to explain what facts the FTS found. Other than a brief sentence in its reasons section
referring to Mr A's evidence of working abroad, it has not set out the factual basis as to
what material facts it is relying upon in reaching its decision.
[23] Parties were asked by the Upper Tribunal for Scotland whether it was possible now
to agree the factual basis as to Mr A's use of the property. If not, parties were asked for
further submissions on whether the appeal should be upheld on the basis of insufficient
findings in fact. I am grateful to Mr A and the Council for responding to the UTS queries
after being directed to particular parts of the FTS decision. Unfortunately it is clear from
those responses that important matters of fact cannot be agreed.
[24] Despite having made comment on the permission to appeal decision by the FTS, I
nonetheless grant this appeal. The ground for doing so is that the FTS have not made
sufficient findings in fact on the surrounding circumstances as to the use of the property to
then be able to apply the reasonable onlooker test. The appeal is upheld, and a further
hearing is required before the FTS.
[25] As indicated, the question of whether a property is a main or sole residence is fact
sensitive. It requires the decision maker to have a clear understanding of the relevant facts.
In a case such as this, that will include matters such as periods of time which Mr A and his
family reside at the property in Shetland over an annual period, or perhaps over a number
of years (although it is not simply a test as to which property more time is spent at); the
nature of their ties to each property that is in Shetland and abroad, including matters as
dentists, doctors, schooling, registration to vote, correspondence addresses for
administration issues including banking and insurance; the whereabouts of personal
belongings beyond which are needed for day to day work, which might be, for example,
family photographs, heirlooms, items of sentimental value; their living arrangements
abroad and the security of tenure at that other property; the details of the contract of
employment that Mr A is subject to abroad, and his security in relation to that contract and
to any visa arrangements that apply to him or family members.
[26] It goes without saying that in such a fact sensitive issue the UTS cannot give
an exhaustive list. Each case turns on its own facts, and which facts are relevant will
depend on the circumstances of each case. There is an argument that it is not just a question
of time spent at each property. The FTS may wish to see documentation from both parties
to verify their position and make appropriate case management directions as to what facts
can be agreed, and what documentation should be lodged to allow other facts to be agreed
or to assist to be proved. If Mr A wishes to rely upon the facts (or caselaw that might assist),
he must put those squarely before the FTS. There is, for example, a dispute as to how many
days of the year the appellant and his family are in occupation at the property in Shetland.
There is a dispute as to previous documentation completed suggesting the property was
unoccupied. There is a dispute about the nature of Mr A's employment; he complains the
Council wrongly considered his contract of employment not to have a fixed end date and
did not attempt to engage with him as to whether that was factually correct. There may be a
dispute as to the position regarding his right to work abroad. The Council and Mr A are
encouraged to agree what facts they can. With documentation or vouching, for example, the
facts Mr A sets out in his submissions to the UTS of 8 March 2025 on page 9 may be
accepted by the Council.
[27] The appeal is allowed, the decision of the FTS is quashed. The case is remitted to a
freshly constituted tribunal hearing.
A party to this case who is aggrieved by this decision may seek permission to appeal to the Court of
Session on a point of law only. A party who wishes to appeal must seek permission to do so from the
Upper Tribunal within 30 days of the date on which this decision was sent to him or her. Any such
request for permission must be in writing and must (a) identify the decision of the Upper Tribunal to
which it relates, (b) identify the alleged error or errors of law in the decision and (c) state in terms of
section 50(4) of the Tribunals (Scotland) Act 2014 what important point of principle or practice
would be raised or what other compelling reason there is for allowing a further appeal to proceed.
Sheriff McCartney
Member of the Upper Tribunal for Scotland
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