Case facts. In Davidson v HMRC, the taxpayer (D) claimed his main home was a flat in London, despite only living there for ten weeks. D owned various properties and explained that he couldn’t afford to move into the flat in London at first, and decided to let it out. Once his finances improved, he and his partner moved into the property with the intention of living there long term. During the ten-week period incidents of domestic violence took place, the relationship ended and both parties vacated the property. Police reports were provided as evidence of the domestic violence.

Challenge. D had been asked by HMRC why he purchased the property and his response was that it was an investment initially. It was noted that D did not register with a doctor in London, was registered to vote in Derbyshire and had not notified the DVLA of his London address. However, the address held by the DVLA was being let.

Decision. The tribunal stated that whether a property is a main home is a matter of subjective intention and required an assessment of D’s credibility. The couple moved into the property with the intention of it being their home on a long-term basis and the fact that this did not work out did not alter D’s original intention and expectations. The appeal was allowed, confirming that the length of time is not the deciding factor where private residence relief is concerned. The final 18 months of ownership will now be exempt from capital gains tax due to the successful claim for private residence relief.

Tip. Encourage your clients to make an election to nominate a property as their main home within two years of purchasing an acquisition to avoid a challenge to the facts.

The full transcript can be found here https://www.bailii.org/uk/cases/UKFTT/TC/2019/TC07128.htm

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