In March and April of this year we reported on the cases of Susan Bradley ( UKFTT 131 (TC) and of Mr David Morgan  UKFTT 181 (TC). Both cases involved claims before the First-tier Tribunal (FTT) for principal private residence (PPR) relief in relation to disposals of properties occupied for relatively short periods during relationship breakdowns. In the first case, relief was denied; in the second it was allowed.
A third case – Wade Llewellyn ( UKFTT 323(TC), published 12 June 2013) – has now been presented to the FTT and again relief has been denied.
The key facts are these:
- Mr Llewellyn had lived with his partner at 10 Netley Terrace, Southsea since 1977.
- In November 1996, as a result of difficulties in the relationship, he moved into an alternative property which he has recently purchased, 10 Henderson Road, Southsea.
- Within a relatively short period the rift with his partner was healed, and he had moved back to their original home by (at the latest) September 1997, and 10 Henderson Terrace was then let.
- The property was eventually sold in May 2007.
The question which the FTT had to consider was whether, while he occupied 10 Henderson Road, it was as his “only or main residence”. If he did, an element of his gain would be exempt from capital gains tax, and lettings relief would be due.
The FTT were prepared to accept that Mr Llewellyn had taken his chair, sleeping bag and kettle to 10 Henderson Road in November 1996 but held that this on its own was not sufficient to show that he had moved into that property as his only or main residence. They stated that:
49. In order to show that occupation in any particular case amounts to residence with the requisite degree of permanence, some degree of continuity or some expectation of continuity, it must be expected that the taxpayer in question should have taken some steps to demonstrate to the “wider world” his ties with the property which he is claiming has become his only or main residence. Any individual factor such as notifying change of address, registering to vote from the new address or basing applications for credit cards at that address is not necessarily a pre-requisite for this purpose, but the overall picture must be consistent with the proposition that the taxpayer has moved his base from where he has previously been living and established it at that new address.
The findings of fact then made by the FTT did not satisfy the above test, particularly:
- There was no evidence of him having established his base at 10 Henderson Road, as he chose to keep all “official” records concerning his contact details as being at 10 Netley Terrace.
- There was no independent evidence to show that his occupation of the property amounted to residence there with some degree of permanence, some degree of continuity or some expectation of continuity.
- He had conceded in response to one question from HMRC’s representative that he was basically “camping out” in Henderson Road, and hoping for reconciliation with his partner.
In short, the evidence provided by Mr Llewellyn was not sufficient to satisfy the FTT that he occupied 10 Henderson Road as his only or main residence.
This case once again demonstrates the importance of the evidence in relation to any PPR claim and that, particularly, in establishing that a property is your only or main residence, it is important to make sure that what is done in terms of ‘official’ records and other third parties can be crucial.
Getting this right while you are actually in occupation is the key and this is therefore an area where careful planning and record keeping then will avoid problems later.