In James Dutton-Forshaw v HMRC [2015] TC04644 the First Tier Tribunal (FTT) accepted that a property occupied for only seven weeks was a taxpayer's only or main private residence for Capital Gains Tax.
- Mr Dutton-Forshaw purchased a London property in June 2006, He occupied it from 5 August to 26 September 2006 and let it from December 2006 to November 2009.
- He claimed CGT Private Residence Relief (PRR) and lettings relief which reduced the capital gains tax liability on the disposal to nil.
The FTT heard and discussed a lot of evidence surrounding the personal circumstances of the taxpayer and his former wife, and how it came about that he only occupied the property for only a short time. In September 2006 he left London and moved back to Lymington, the area where he had previously lived with his former wife and child; his wife had decided to move to Spain and he returned to Lymington to look after his daughter.
Mr Dutton-Forshaw argued that his intention when he first occupied the Cornwall Gardens property was that his occupation be permanent:
- He had applied to the local authority for a parking permit, which required him to declare Cornwall Gardens to be his main, permanent home.
- He had declared his occupation to the local authority for council tax purposes.
- Despite being the owner of a number of other properties at the time, there was nowhere else at the time that was his home.
- The length of occupation was short due to circumstances beyond his control.
- It was bought to replace his previous London residence which he occupied until August 2006 but which was too large and expensive for his circumstances as a single man. This property was let from August 2006 onwards.
- In Summer of 2006 he intended for London to be his home for a number of reasons: business, building a property portfolio, attending church and so on. He had kept a permanent base in London for the past twenty years despite having a family home with his wife elsewhere.
The tribunal accepted that he had intended to be based in London, and that when he moved into Cornwall Gardens he hoped to live there on continuous basis despite being aware that circumstances might arise which would require him to move to live full-time in Lymington.
They concluded that the nature, quality, length and circumstances of his occupation of Cornwall Gardens did make the occupation qualify as a residence.
Comment
It's a two part test: was the property ever a residence? If so, then was it ever the taxpayers only or main residence? An unusual set of facts that were fortunately backed up with some quality evidence that proved the actual occupation of the property as a private residence, albeit for a very, very short time.
Useful links:
Case reference: Richard James Dutton Forshaw v HMRC [2015] UKFTT TC04644
Our guide: CGT Private Residence Relief
