A recent tribunal case has declared that 10 weeks occupation of a residential property is enough to qualify a taxpayer for Principle Primary Residence (PPR) Relief .
The case concerned was Davidson v HMRC, the taxpayer claimed that his main residence was a London flat which he had occupied for 10 weeks. The property had initially been purchased for £555,000 as an investment due to it not being financially viable to live in the flat. However, following a change in his financial position, the taxpayer moved into the flat with his then partner. During the period of occupation the taxpayer had not notified the DVLA of his movements, although the address held by the DVLA was let out at the time. He was also registered to vote in Derbyshire and did not register with a London doctor.
Whilst living at the London flat a series of domestic violence incident occurred between the taxpayer and his partner, police reports produced as evidence, resulting in the relationship ending and both individuals going their separate ways. The parties vacated the property after a period of 10 weeks and HMRC argued that this did not qualify the property as their main residence.
The First Tier Tribunal ruled that the property was in fact the taxpayer’s main residence for the short 10 week period and therefore qualifies for PPR relief. They ruled that whether a property is an individuals main residence is a matter of subjective intention. Whilst the initial intention was to purchase the property as an investment, that intention changed and there is no reason not to believe that when the couple moved in, they planned to stay there for the foreseeable future. The length of time spent in the property does not determine whether it is a taxpayer’s main residence, and so the taxpayer received a capital gains exemption for the 10 weeks of occupancy and the last 18 months of ownership.
The full description of the case can be found here – Davidson vs HMRC Decision
