In Mitesh Kothari v HMRC [2016] UKFTT TC04915 the First Tier Tribunal (FTT) decided that the occupation of a property was not sufficient to qualify it as a residence.

  • Mr Kothari (Mr K) purchased the property in 2005, letting it out until January 2009.
  • On 19 January 2009 he moved into the property.
  • On 29 January 2009 he made an election that this should be treated as his principal private residence.
  • The property was put on the market in February 2009, and sold in July 2009.
  • Mr K claimed CGT Private Residence Relief (PRR) and letting relief to reduce the gain on disposal, which HMRC refused.

Mr K's case:

  • He had intended to make a permanent home for himself and his family, and it was not until after he moved in that an estate agent advised him it would be a good time to sell.
  • He could not provide any evidence as to when the estate agent had approached him or when he instructed the agent.
  • In support of his claim he was only able to provide an electricity bill and a TV licence addressed to the property, and a council tax bill for the property which was addressed to his other residence.

HMRC contended that Mr K’s occupation of the property did not have the necessary degree of permanence:

  • There was only a very short period of occupancy before the property was put on the market.
  • He would be moving from a four bedroom house to a two bedroom flat with a wife and three children.
  • He had advised HMRC by telephone that he was holding on to the property to see if the family enjoyed living there.
  • He had not moved his furniture there, instead he bought the previous tenant’s furniture.
  • No change was made to his eldest child’s school arrangements.
  • No attempt had been made to let his other residence which was occupied by members of his family throughout the period January to July 2009.
  • Mr K had not advised his bank or the DVLA of his change of address.

The FTT agreed with HMRC, deciding that Mr K’s occupation of the property lacked the necessary degree of permanence or continuity, or the expectation of continuity of residence for the property to qualify as his private residence. His appeal was dismissed.



Mitesh Kothari v HMRC [2016] UKFTT TC04915