Mr Higgins did not meet the criteria for the extra statutory concession (ESC D49) as this only allows a taxpayer a period of grace of one year after contract to complete, or up to two years where a taxpayer acquires land to build a dwelling or acquires a dwelling which requires alteration before occupation. Mr Higgins was kept waiting for over six years.
The statutory framework
PPR is provided for by sections 222 and 223 of the Taxation of Chargeable Gains Act 1992 . Section 221(1) explains that the section applies to:
"a gain accruing to an individual so far as attributable to the disposal of, or of an interest in—
(a) a dwelling-house or part of a dwelling-house which is or has at any time in his period of ownership been, his only or main residence …".
The relief is not an absolute exemption. The extent to which that gain is relieved, so far as relevant, was in these terms at the material time:
"(1) No part of a gain to which section 222 applies shall be a chargeable gain if the dwelling-house or part of a dwelling-house has been the individual's only or main residence throughout the period of ownership, or throughout the period of ownership except for all or any part of the last 36 months of that period.
(2) Where subsection (1) above does not apply, a fraction of the gain shall not be a chargeable gain, and that fraction shall be—
(a) the length of the part or parts of the period of ownership during which the dwelling-house or the part of the dwelling-house was the individual's only or main residence, but inclusive of the last 36 months of the period of ownership in any event, divided by
(b) the length of the period of ownership."
This last period relief was reduced from 36 months in April 2014, but was retained for owners who move into a care home or who are disabled
Counsel for HMRC submitted that the words "period of ownership” on their ordinary meaning, refer to the period between acquisition and disposal.
For CGT purposes, section 28 TCGA confirms that, where an asset is disposed of and acquired under a contract, the time at which the disposal and acquisition is made is the time the contract is made.
That meant that the date of acquisition was 2 October 2006, when contracts were exchanged, not 5 January 2010, when completion took place.
This would mean Mr Higgins enjoyed relief from CGT as to only part of the gain he made on the apartment.
The Court of Appeal found for Mr Higgins allowing his appeal from the Upper Tribunal.
The ordinary meaning of "period of ownership" applied in both section 222 and 223 TCGA 1992.