In R Dutton-Forshaw (TC4644) the taxpayer claimed private residence relief on the disposal of his flat in London in November 2009. The flat was acquired it in March 2006 and was occupied for just two months by the taxpayer, in August and September 2006. For the rest of the period of ownership the property was let out to a 3rd party.
HMRC refused a ‘private residence relief’ claim (to reduce the taxable capital gain on sale), but the taxpayer disagreed with that decision and decided to appeal it at Tribunal.
The main issue for the Tribunal to consider was whether or not the flat had ever actually been occupied as the taxpayer’s private residence. In the event, evidence was produced to show that that the taxpayer had no other property that could have been his residence in August/September 2006, that he worked in London and that he had a parking permit at the flat. This was sufficient to persuade the Tribunal that the nature, quality, length and circumstances of the taxpayer’s occupation of the flat made it qualify as a residence for the purposes of s 222 and s 223 TCGA, such that private residence and lettings relief were available on the sale of the property and the case was agreed in the taxpayers favour.
In summary, if a taxpayer can show that he has occupied a property as his ‘principal private residence’, even for just a relatively short period of time, the capital gain tax payable on disposal may be reduced to nil.
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