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recent case before the First-tier Tribunal (FTT) has
questioned quality of occupation and whether this amounts to residence
the meaning of s 222(5) TCGA 1992. The case was M
J and Mrs B A Harte (TC 1951). The longest period that Mr and
Harte had lived in the property was three weeks which was considered
enough. The key point arising from the case was however the importance
were the facts?
and Mrs Harte, lived in a property as their main
residence which they bought in 1969. In 1992 Mr Harte inherited a
Grove, from his father, which his stepmother occupied as her residence
she died in May 2007. Mr Harte transferred to his wife a joint interest
property after the stepmother’s death.
August 2008 the Hartes elected for the inherited
property to be their main residence for the week ending 19 October
Although their first home was only six miles away, they claimed to stay
inherited property regularly and treat both properties as homes
Mr and Mrs Harte kept no records of the periods they stayed in the
house, and they did not ensure the bills were in their own names.
October 2007 Mr and Mrs Harte sold Alder Grove and
claimed only or main residence relief under TCGA 1992 s 222. HMRC
the claim and assessed the couple to capital gains tax (CGT) as they
consider the occupation was permanent enough to satisfy this section.
taxpayers stated they had intended to make Alder Grove their home, and
there briefly. Mr and Mrs Harte received an offer from a neighbour to
property, and they decided to accept that offer. The longest time that
couple lived in Alder Grove was three weeks. The taxpayers did not move
their own possessions into Alder Grove nor did they carry out any work
property. Mr and Mrs Harte had spent short periods in the house to test
would be like to live there, but it was decided that this was not
Tribunal rejected the election under s 222(5) TCGA
1992. This rejection was not on the basis of the short period it
but because there was no evidence of Mr and Mrs Harte ever occupying
property with any degree of permanence or continuity. It could be
there was an attempt to “flip” the houses by Mr and Mrs Harte in order
is the tax planning advantage by which a
taxpayer elects for a second home to be his or her main residence for
purposes (s 222(5)), then changes that election in favour of the first
short time later. The “short” should ideally not be “ridiculous” and
should be a degree of permanence. By this procedure the first home
loses the main
residence exemption for a few weeks, and the second home achieves at
three years’ worth of exempt gain. However, to be effective both
must be factually occupied as the taxpayer’s home, and the deadlines
and changing the election must be achieved. As this case shows it is
that there is evidence of actual occupation.
is possible to claim PPR (principal private
residence relief) - the only or main residence relief in a situation
faced by Mr and Mrs Harte but there must be evidence of occupation. It
argued that this case does not provide any new guidance but simply
established principles of the need for fact, evidence and permanence.
essential for taxpayers not to take the PPR claim (and the planning and
in respect thereof) for any property too lightly.
About the Author
Supplied by Julie
F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire,
Tel: 01962 735544. Email; firstname.lastname@example.org,
the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine
ISBN: 0406966540, and Stanley: Taxation
of Farmers and Landowners (LexisNexis).
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Article Published/Sorted/Amended on Scopulus 2012-11-02 09:08:44 in Tax Articles