fbpx

Couple Overturn Capital Gains Tax Demands Raised on Sale of Their Home

4th January 2021 By

HM Revenue and Customs (HMRC) are big battalions by anyone’s standards, but their word is not law and, with expert legal assistance, they can sometimes be proved wrong. In one case, a couple succeeded in overturning six-figure Capital Gains Tax (CGT) demands raised against them following the sale of their home to a developer.

The couple reluctantly sold their substantial home when faced with the prospect of new houses being built all around them. On the basis that the property was their principal private residence (PPR) and thus exempt from CGT, they did not report the gain arising from the sale on their tax returns. About three years later, however, HMRC raised CGT demands of £162,820 against each of them.

HMRC asserted that the property’s garden – which extended to 0.94 hectares – was larger than it needed to be and that CGT relief was only available in respect of 0.5 hectares. However, in challenging the demands before the First-tier Tribunal (FTT), the couple contended that the whole of the garden was required to enable reasonable enjoyment of the property.

Ruling on the matter, the FTT noted that, in determining whether the garden was larger than required, context was everything. At one extreme it might be said that nobody needs a garden at all. At the same time, what might be viewed as a large garden in a city centre would be considered far too small for a stately home.

Upholding the couple’s appeal, the FTT observed that the property was located in a rural setting and comprised a large main house, a one-bedroom cottage, a three-car garage and a swimming pool. The garden was proportionate to the property’s scale and character and its size was comparable to the grounds of other substantial country homes. The couple were thus entitled to full PPR relief in respect of the property’s sale and the CGT demands were reduced to nil.

Source: Concious

Latest News

Emergency COVID-19 Legislation – Judges Crack the Democratic Whip

20th January, 2021 By

Wide-ranging legislative changes that would normally require months, even years, of consultation were rushed through in a matter of days in response to the COVID-19 pandemic. A Court of Appeal ruling in a landmark case concerning emergency changes to the children's social care system revealed the critical role judges play in ensuring that democratic principles are observed. In the days prior to lockdown, the Government proposed sweeping changes to the system which were, at breakneck speed, enshrined in the Adoption and Children (Coronavirus) (Amendment) Regulations 2020. They introduced numerous amendments...

Clubbing Together with a Friend to Buy a Home? See a Lawyer First

14th January, 2021 By

It makes sense for friends to club together so that they can buy properties they would be unable to afford by themselves. However, a cautionary High Court ruling showed that such arrangements are only wise if lawyers are consulted so that all concerned know exactly where they stand from the outset. The case concerned two work colleagues, one of whom had £50,000 to put towards the purchase of a home of her own. Her credit rating was, however, too poor for her to obtain a mortgage. She had discussions with...

Legacies and Entitlement to Means-Tested Benefits – High Court Ruling

12th January, 2021 By

When making a will, most people would wish to provide for loved ones in need. As a High Court case showed, however, means testing of many state benefits creates a very real risk of such good intentions coming to nought and that is one very good reason why professional will drafting is so important. The case concerned a woman aged 21 with autism and learning disabilities, who was left about £170,000 in her grandfather's will, subject to her attaining the age of 25. On her receipt of that capital sum,...

Parents Who Simply Cannot Cope Don't Deserve Condemnation

8th January, 2021 By

Through no fault of their own, some parents are simply incapable of providing the care and stability that all children need whilst growing up. As one case showed, however, the approach of family judges is not to condemn but to seek solutions that enable children to continue living in the bosom of their families. The case concerned two children, aged four and five, whose mother suffered mental health difficulties, in part due to her own unhappy childhood. Unable to cope, she tended to smack and shout at them. They suffered...