When affairs of the heart went awry, a man faced an unexpected tax bill.

The man decided to buy a property in 2001 when he was engaged to be married. Shortly before the completion date on the purchase, his fiancée ended their engagement. Nonetheless, he completed the purchase and lived in the property for about three months before moving out and letting it to tenants.

He let the property from August 2001 until March 2006, when he moved back in, having previously lived mainly with his parents.

In August 2006, he sold the property and made a substantial profit on the sale. As a result, HM Revenue and Customs (HMRC) raised an assessment to Capital Gains Tax (CGT) for more than £12,000. The man argued that there was no CGT due as the gain was covered by the exemptions which apply to a person’s principal private residence (PPR).

Two points were critical to the decision. The first was the man’s intention when buying the property. The Tribunal accepted that he had intended it to be the matrimonial home and completed the purchase in the belief that his fiancée was suffering from ‘cold feet’ and would change her mind and move in with him later.

The second point was whether his periods of occupancy were sufficient for the property to be properly regarded as his PPR. HMRC argued that a PPR is a matter of fact as well as law and that his occupation of the property was insufficient to establish it as his residence.

The Tribunal accepted the man’s arguments and quashed the CGT assessment.


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