Establishing Residence for Capital Gains Tax Relief: Moore v. Revenue & Customs

Introduction

Moore v. Revenue & Customs ([2010] UKFTT 445 (TC)) is a pivotal case adjudicated by the First-tier Tribunal (Tax) on September 21, 2010. The appellant, Jason Terrence Moore, challenged an assessment by HMRC that imposed a Capital Gains Tax (CGT) liability of £24,230.40 for the tax year 2004/2005, later slightly reduced to £24,067.60. The crux of the dispute centered on whether Moore's property at 144 Bishop's Rise, South Hatfield, qualified for CGT relief under section 222 of the Taxation of Chargeable Gains Act 1992 (TCGA), which offers relief for the disposal of a private residence. The key issues revolved around the property's status as Moore's main or only residence and the nature of his occupation, particularly whether his short-term residence was genuine or merely preparatory for letting the property.

Summary of the Judgment

The Tribunal meticulously examined the evidence presented by both the appellant and HMRC. Mr. Moore and his then-wife, Katie Moore (née Archer), had acquired the Bishop's Rise Property in December 1999 but transferred sole ownership to Moore in March 2001. Moore claimed that he had genuinely intended to make the property his main residence, thereby qualifying for CGT relief. However, HMRC contested this, asserting that the property was primarily renovated for letting, not habitation.

The Tribunal assessed various factors, including renovation activities, residency evidence, and the relationship dynamics between Moore and Archer. Crucially, it found inconsistencies and a lack of substantive evidence supporting Moore's claim of genuine residence. The Tribunal concluded that Moore failed to demonstrate that Bishop's Rise was his main residence, especially given the short duration of occupation (less than three months) and evidence suggesting the property was intended for rental purposes. Consequently, the appeal was dismissed, denying Moore the sought CGT relief.

Analysis

Precedents Cited

The Tribunal referenced several key cases to interpret the statutory provisions governing CGT relief:

Sansom v Peay [Year] TC 1
Frost v Feltham [Year] TC 10
Moore v Thompson [Year] TC 15
Goodwin v Curtis [Year] TC 478

These cases collectively established that for a property to qualify as a main residence, there must be an assumption of permanence, continuity, and expectation of continued residence. In Goodwin v Curtis, the Court of Appeal emphasized that mere occupation does not suffice; the taxpayer must demonstrate an intention to reside permanently.

Legal Reasoning

The Tribunal's legal reasoning hinged on the interpretation of Section 222 TCGA, which provides CGT relief for disposals of a main residence. The burden of proof rested on Moore to establish that the Bishop's Rise Property was his only or main residence during his period of ownership.

Moore's occupation of the property was scrutinized under the criteria of permanence and continuity. The Tribunal observed that his residence was brief and primarily occupied while renovating the property for future letting. The lack of substantial evidence, such as council tax records, utility bills, or DVLA registrations at Bishop's Rise, weakened his claim. Furthermore, the concurrent residence at another property (Hereward Green, Loughton) suggested that Bishop's Rise was not his main home.

The Tribunal also considered the extra-statutory concession D49, intended for owners who occupy their property for a short period before letting it, but found it inapplicable since there was no subsequent period of main residence.

Impact

This judgment reinforces the stringent criteria for qualifying for CGT relief under section 222 TCGA. Taxpayers must provide clear and convincing evidence of their property's status as their main or only residence. The case underscores the importance of maintaining records that substantiate residence claims, such as council tax payments, utility bills, and official registrations.

For future cases, this decision serves as a precedent that mere occupation of a property does not automatically confer CGT relief. The intention behind acquiring and occupying the property is pivotal. Tax authorities will likely scrutinize short-term occupations and investigate the underlying intent, especially when renovations or improvements precede letting activities.

Complex Concepts Simplified

Capital Gains Tax (CGT): A tax on the profit (gain) made when an individual sells or disposes of an asset that has increased in value.

Section 222 TCGA: A provision in UK tax law that offers relief from CGT when an individual disposes of their main or only residence.

Main Residence: The primary home where an individual lives. For CGT purposes, establishing a property as the main residence can exempt the gain from tax.

Extra-Statutory Concession D49: A tax provision that allows for CGT relief in cases where there is a short delay in taking up residence, typically due to necessary renovations or redecorations.

Assumption of Permanence: Demonstrating an intention to reside indefinitely at a property, rather than temporarily or transiently.

Conclusion

The Moore v. Revenue & Customs case serves as a critical reminder of the meticulous nature required in establishing a property's status as a main residence for CGT relief. The Tribunal's decision highlights the necessity for clear evidence of permanent and continuous occupation, aligning with established precedents that prioritize the taxpayer's genuine intent to reside.

For taxpayers, maintaining comprehensive records and demonstrating a stable, long-term occupation of a property is essential in qualifying for CGT exemptions. This judgment reinforces the need for transparency and consistency in residency claims, ensuring that CGT relief is appropriately granted to those who meet the stringent criteria set forth by tax legislation.