Relax. This is not yet another in the long line of Stamp Duty Land Tax Multiple Dwellings Relief cases which seem, like Banquo’s descendants, to ‘stretch out to th’ crack of doom’. It’s about the extent of a ‘main residence’ for the purposes of Capital Gains Tax.
The case is Crippin v HMRC  UKFTT 351 (TC).
In 2006 Mr Crippin had bought a property in Scotland comprising a house (‘Loaningdale’) and what is described in the case as ‘an adjacent annex’. He lived there with his partner Ms McKean and their children.
In 2010-11 work was done on the annex converting it to a three-bedroom flat (though one bedroom was ‘due to its small size’ used as a home office) with its own kitchen and bathroom facilities, and it became known as ‘Benko’.
Access to Benko was either through a separate independent entrance or via a first-floor balcony shared with Loaningdale. The two properties were said to be so close together that it was possible ‘to see right into the sitting-room’ of Benko from Loaningdale.
For about a year from October 2011 Benko was occupied by ‘friends of friends’ of Mr Crippin and Ms McKean under informal arrangements. There was no tenancy agreement (though contributions were made to ‘family accommodation overheads’); Mr Crippin and Ms McKean continued to have unrestricted access to Benko and to store some of their belongings there; and Mr Crippin’s parents had stayed there when the ‘friends of friends’ were away. A dispute with the council as to whether there had been ‘private letting’ and whether this was in breach of the planning consent given for the conversion works was resolved by the grant of retrospective approval.
Mr Crippin sold Benko to Ms McKean in January 2013.
In the period between the departure of the ‘friends of friends’ and the date of sale, Benko was advertised as available for furnished holiday lets and actually let for 31 days. For the rest of the time it was used by the family for personal and family purposes.
So: the question was: ‘Was Benko part of a dwelling-house that had been Mr Crippin’s only or main residence?’.
The Tribunal noted that
‘a dwelling-house might consist of more than one building even if the other building itself constituted a separate dwelling-house. Therefore, the issue before us is whether Benko, which is “appurtenant” to, and “within the curtilage” of Loaningdale, was a part of a dwelling-house that had been Mr Crippin’s only or main residence at any time during the period in which he owned it.’
It concluded that
‘Having carefully considered the evidence, particularly the lack of any formal arrangement under which Ms McKean’s friends were allowed to stay at Benko, that Mr Crippin’s and Ms McKean’s “stuff” remained there, their unfettered access to the property and use of it during this period, eg family members staying there, we consider that Benko was, from the time of its construction until the departure of Ms McKean’s friends in around October 2012, Mr Crippin’s only or main residence.’
The Tribunal considered that for the period from October 2012 until sale, Benko was not part of the main residence; but since that period was part of the final 36 months of ownership (now reduced to 9 months), relief was due in full.
Slightly odd, perhaps, to conclude that Benko was part of Mr Crippin’s main residence for the period when someone else was living there but not for the period when it was merely being held out as available for letting and meanwhile actually used by Mr Crippin. And odder, perhaps, that neither in the parties’ arguments nor in the decision is any mention made of the provisions of TCGA 1992 s223B, which deal with periods during which part of a house is used as the owner’s only or main residence and part is let as residential accommodation: precisely the circumstance we have here. Mr Crippin represented himself so can be forgiven the oversight: but it was arguably naughty of HMRC not to draw this relief to the attention of the Tribunal.
So – probably the right answer: but not necessarily for the right reasons.
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This article was republished in Tax Journal (Issue 1550) and is also available on the Tax Journal website.