Sabbir Patwary v The Commissioners for HMRC
[2024] UKFTT 53 (TC)
The Commissioners for HMRC v Gerald Lee
29 September 2023
[2023] UKUT 242 (TCC)
Upper Tribunal
Mr and Mrs Lee built a new house on land they owned. They sold it and wanted tax relief. The tax office said they should only get partial relief, based on how long they owned the land. The judge said they should get full relief because the important thing was the house, not the land.
Key Facts
- •Mr and Mrs Lee bought land, demolished an existing house, and built a new dwelling.
- •They lived in the new house as their main residence.
- •They sold the property and claimed Private Residence Relief (PRR).
- •HMRC argued PRR should only apply to a proportion of the gain, based on the period the new house was their main residence compared to the period of land ownership.
- •The First-tier Tribunal (FTT) allowed the Lees' appeal.
- •HMRC appealed to the Upper Tribunal (UT).
Legal Principles
Statutory interpretation of "period of ownership" in s223(2) TCGA 1992 regarding Private Residence Relief.
Taxation of Chargeable Gains Act 1992
The purpose of PRR is to avoid double taxation by exempting profits from the sale of a main residence.
Sansom v Peay [1976] 1 WLR 1073
Statutory interpretation should ascertain Parliament's intention as expressed in the chosen words, considering the Act as a whole and its context.
R (Quintaville) v Secretary of State for Health [2003] 2 AC 687
Outcomes
HMRC's appeal was dismissed.
The UT held that "period of ownership" in s223(2) refers to the ownership of the new dwelling house, not the land. The court rejected HMRC's arguments based on avoiding double relief, inconsistencies with other TCGA provisions, and potential for abuse.