Prove Your Main Residence Is Main Residence CGT

In the recent case of Cornelia Simpson vs HMRC, a claim for private residence relief (selling a main home tax free) was denied by the First-tier tribunal (FTT).

Ms Simpson paid £630,000 for a flat in London on 5^th June 2013 and on the 29^th November 2013 solid the flat for £900,000.

HMRC conducted a routine review of Ms Simpsons tax affairs and HMRC made a ‘Discovery Assessment’ for tax of £52,656.76 and a penalty of £14,217.32 for failing to report a large capital gain.

HMRC claimed Ms Simpson was not entitled to claim private residence relief as she had never occupied the flat and acquired the property purely for the purpose of realising a profit when selling it.

Ms Simpson appealed to the FTT, which was dismissed on the grounds that Ms Simpson had no reliable evidence to confirm she had occupied the flat at all, she had refurbished and sold the property within a few months and failed to notify HMRC therefore capital gains tax is payable and the penalty fine.

Comment

We cannot comment on the above case but if you are going to claim your property is your main residence then make sure you live in it as your main home.  Electoral role, council tax, utility bills etc.  If not then HMRC has every right to rule as an investment only property and expect taxes to be paid on sale.