In Raymond and Diana Eyre v HMRC [2025] TC09498, the First Tier Tribunal (FTT) found that a couple who purchased, renovated and disposed of a property for £27 million were not doing so in the 'nature of trade'. In addition, they were entitled to claim Private Residence Relief.
Raymond and Diana Eyre (RDE) purchased a property for £9.75m in 2010 that was subsequently demolished to build a new house. The property, 'Burnsall Street', was then sold for £27,150,000, with the couple claiming Private Residence Relief (PRR) on the sale. During the renovation and sale of Burnsall Street, RDE also owned another house, 'Holland Park'.
- RDE had purchased and renovated various houses after moving to the UK in 1992, some of which had been lived in during their renovation.
- A Limited Liability Partnership (LLP) had been set up to purchase a portfolio of flats. After identifying issues with financing, they chose not to proceed with this project.
- RDE then went on to purchase Burnsall Street, intending to demolish the building and rebuild a modern house in its place.
- Once Burnsall Street was inhabitable:
- RDE moved in on 9 July 2013, with one of their daughters moving in at a later date.
- RDE nominated the property as their main residence from 13 July 2013.
- The Holland Park house was let to a couple known to RDE.
- Burnsall Street was sold on 2 February 2015, with RDE then moving back to Holland Park.
- RDE submitted tax returns based on Burnsall being their main residence.
HMRC considered the purchase, development and sale to be an adventure in the nature of trade. Mr Eyre was issued with an assessment of £1,761,446 and Mrs Eyre, £1,566,853. RDE appealed to the First Tier Tribunal (FTT).
- Trade is defined in the Income Tax Act 2007, s.989, as "any venture in the nature of trade".
- HMRC specifically relied on the 'Badges of trade' set out in Marson v Morton [1986] STC 463 to support their case.
All parties agreed RDE were not in the business of dealing in properties, quoting Taylor v Good, which highlights that a person is not engaged in a venture of trade if he 'owns or buys without present intention to sell'.
The FTT found that:
- RDE intended to refurbish Burnsall Street, move into the property, and sell Holland Park:
- Renovations carried out to Holland Park were noted in minutes of a meeting between RDE and a design company as being carried out to "improve the house significantly to prospective purchasers".
- The loan documentation for Burnsall Street noted that the capital element of the loan facility was to be repaid from personal resources or the sale of Holland Park.
- Significant time and effort had been put into personalising Burnsall Street, which included personalisation of gym equipment suited to Mr Eyre's needs, commissioned artwork and electric vehicle ports specifically for Mr Eyre's model of car. Mr Eyre had also moved his wine collection from Holland Park to Burnsall Street.
- The children had selected their own decor for their areas of the house.
- Holland Park had been on the market since 2010.
- A sales brochure had been drawn up for Burnsall Street. RDE were aware that it was to be offered for sale and they would need to decide whether to accept any significant offer. Despite this, the FTT found there was no intention to trade from inception.
HMRC relied on the ninth badge of trade, which identifies a deal purely to make a "profit on the turn". The FTT pointed out that the ninth badge commences by asking if the item provided enjoyment for the purchaser; if the answer is yes, this may indicate an intention to buy for personal satisfaction.
- The FTT found that it was a fact that the couple had enjoyed the property and took personal satisfaction in the refurbishment. It concluded there was no venture in the nature of trade.
The FTT also agreed that PRR could be claimed on Burnsall Street as it had been demonstrated there was a degree of permanence and continuity sufficient to turn 'mere occupation into residence'.
RDE were granted PRR relief on the sale of the property.
Useful guides on this topic
Badges of trade: Are you trading or not?
Are you trading, running a business or just buying and selling investments? Is your 'side-hustle' taxable? The 'Badges of Trade' are a set of indicators built up over time by the courts to decide when an activity is a trading or investment activity.
Is it a trade, a business or an investment activity?
Starting in business or running one? Is your new or existing business a trade, a business or an investment activity? The distinction is very important for tax purposes. This guide runs through key issues for tax purposes.
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?
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