In Roger Crippin v HMRC [2021] TC8285, the First Tier Tribunal (FTT) allowed Private Residence Relief (PRR) on the gain made on the disposal of a property adjacent to the owner's main dwelling house. The relief can apply to two properties within the same curtilage. 

  • Mr Crippin purchased a property, ‘Loaningdale’ in Scotland and later developed its garage to create a flat, known as ‘Benko’.
  • The two properties were used by him and his partner and their family and friends.
  • He sold Benko to his partner and but failed to report the disposal on his Self Assessment tax return.
  • HMRC enquired into the disposal and denied his subsequent claim for Private Residence Relief (PRR) on the basis that the flat was a separate dwelling and had been let out.
  • Mr Crippin Appealed that decision, also claiming that his partner had a beneficial interest in the property.

The FTT found that Benko was a part of a dwelling-house, ancillary to Loaningdale, which was Mr Crippin's only or main residence until it was sold.

They noted that Benko had been marketed as a Furnished Holiday Let, but this was only in the final period of ownership. As this was part of the last 36 months of that period of ownership Mr Crippin was entitled to PRR.

It was unnecessary to consider the question of Beneficial Ownership as PRR applied, however, the FTT went on to consider the point.

The judge found that no declaration of trust had been made to transfer the beneficial ownership to Mr Crippin’s partner, however, as the property is located in Scotland and Scottish property law does not distinguish between the legal and beneficial interests in heritable property. Ms McKean, who did not hold legal title to Benko, could not have held any beneficial interest in it.

Useful guides

Private Residence relief: subscriber guide
What is Private Residence relief (PRR)? What are the qualifying conditions? Can you claim relief on two homes? How do you claim PRR? Can you claim PRR if you develop your garden?

Statutory Review
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review?

Tax Appeals
What type of decision is appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

Penalties: Failure to Notify Chargeability
What penalties apply if you fail to tell HMRC that you have taxable income or gains?

External links

Roger Crippin v HMRC [2021] TC8285

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