In Stephen and Lisa Core v HMRC [2020] TC07917, the First Tier Tribunal (FTT) allowed the taxpayers’ private residence relief claims despite their occupation of the dwelling only lasting six to eight weeks.

  • Mr and Mrs Core purchased ‘Green Lane’ on 22 March 2013 while living in rented accommodation ('Victoria Road').
  • They did not move into Green Lane until March/April 2014 as Mr Core undertook refurbishment work on the property. During the refurbishment work, Mr and Mrs Core fell out with their neighbours.
  • An individual made a series of offers to purchase Green Lane throughout February, March and April 2014 which were declined. An increased offer made towards the end of May 2014 was accepted and Green Lane was sold to that individual on 16 June 2014.
  • The family moved back to Victoria Road shortly after the Green Lane offer was accepted. They had not terminated their lease of Victoria Road because Mr Core used the property as an office, storage and amenity site for the building work his company was doing next door.
  • Mr and Mrs Core did not include the gain on the sale of Green Lane in their 2014-15 tax returns. HMRC raised tax assessments totalling £23,967 charging careless inaccuracy penalties of £4,224.
  • A statutory review upheld these decisions with a minor reduction in penalties of £90.
  • The taxpayers appealed to the FTT.

A gain made on the disposal of an individual’s only or main residence can be exempt from Capital Gains Tax under the Private Residence Relief (PRR) rules.

  • It is necessary for the taxpayer to demonstrate occupation of the property as their residence, with a degree of permanence, some degree of continuity or some expectation of continuity.

The FTT allowed the appeal, finding that:

  • Mr and Mrs Core moving to Green Lane with their children in March/April 2014 was indicative of their expectation to live there indefinitely.
  • Had Mr and Mrs Core thought there was a serious possibility of their accepting an offer on Green Lane in the short term, they would have stayed at Victoria Road given its continuing lease.

Useful guides on this topic

PRR: Private Residence Relief
What is Private Residence relief (PRR)? What are the qualifying conditions? Can you claim relief on two homes? How do you claim PRR? Can you claim PRR if you develop your garden?

Penalties: Errors in Returns and Documents
What penalties apply if you make an error or mistake? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

External links

Stephen and Lisa Core v HMRC [2020] TC07917  

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