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In William P Harrison v HMRC  TC04693 the taxpayer made multiple invalid CGT main residence elections as it was held that none of the elected properties was ever occupied as a “residence”.
The bricks and mortar
Mr Harrison (“Mr H”) owned a farmhouse which he considered to be his main residence. He lived in this property all year round, spending maybe one night a week elsewhere during winter months and two or three nights elsewhere over the summer (May to September).
During the period from 2001 to 2009 he made main residence elections in respect of twelve different properties, some of which were within the same block of flats, and some for periods as short as two or three months.
During the tax year 2009/10 and 2010/11 he sold six of these properties, claiming Private Residence Relief (PRR) in respect of each of them. He later withdrew some of the claims so that only four disposals remained the subject of the enquiry.
HMRC argued that none of the properties in the enquiry were residences:
The roof fell in
The tribunal agreed with HMRC finding that the farmhouse was at all times his only or main residence, with no other property meeting the legal residence test.
The tribunal disagreed with HMRC on the issue of penalties: HMRC had argued that the appellant’s actions were deliberate, however the tribunal found that they were merely careless and reduced the amounts charged.
Searching through the debris
Mr H believed that if he owned and occupied two properties at the same time, he simply needed to make an election to enable both to qualify for PRR, and this case serves as a reminder that this is, well, just not true!
Occupation is not the same as residence, if a property is not a residence then an election will not make it so…
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