A couple who bought a plot of land, demolished the existing property and built a new home, has won an appeal over a £541,821 disputed tax bill at the Upper Tribunal
The case centred around the issue of ‘period of ownership’ and how this was interpreted by HMRC and the appellants. HMRC appealed to the Upper Tribunal following a lower tribunal decision from 2022 that ruled that the couple’s calculation for principal private residence relief was correct.
The tax dispute relates to the purchases of a plot of land for £1,679,000 at Nun's Walk in Virginia Water by Mr Gerald and Mrs Sarah Lee on 26 October 2010. They demolished the existing house and built a new house which they then lived in from 19 March 2013 until the property was sold in May 2014.
The Lees claimed principal private residence relief (PRR) on the gain which arose when they sold the plot on 22 May 2014 under s223(1) Taxation of the Chargeable Gains Act 1992 (TCGA 1992). Section 233(1) stated that no gain was chargeable ‘if the dwelling-house…has been the individual’s only or main residence throughout the period of ownership…’. They considered all of the gain accruing from 26 October 2010 to 22 May 2014 was eligible for PRR.
On 29 J
