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HMRC internal manual

Scottish Taxpayer Technical Guidance

Place of residence: relevant Tax Case law

The concept of ‘a residence’ is used in various areas of tax legislation, in particular Capital Gains Tax private residence relief (in relation to which there are many tax cases) which are of relevance to interpreting ‘residence’ in the context of Scottish taxpayer status.

In Sansom v Peay (52TC1) Brightman J summarised the purpose of private residence relief as,

‘To exempt from liability to Capital Gains Tax the proceeds of sale of a person’s home.’

In Frost v Feltham (55TC10), where (in the context of interest relief) the Court was asked to decide which of an individual’s residences was his main residence, Nourse J stated,

‘A residence is a place where somebody lives.’

These quotations clearly emphasise the point that a residence is where an individual lives - their ‘home’. There is, however, no minimum period of occupation that would enable an individual to establish a residence.

This was confirmed by Millet J in Moore v Thompson (61TC15) where he stated,

‘It is clear that the Commissioners were alive to the fact that even occasional and short residence in a place can make that a residence; but the question was one of fact and degree for the Commissioners.’

Every case must be decided upon its own particular facts.

The meaning of the word ‘residence’ was considered further in the case of Goodwin v Curtis (70TC478).

In 1983 Mr Goodwin set up a company to acquire Hazleton Manor Farmhouse. At that time he was buying it with a view to making it a home for himself and his family. On 1 April 1985 Mr Goodwin acquired the farmhouse from the company, but prior to the completion of his purchase he had instructed agents to sell the farmhouse. At the time of his acquisition he had separated from his wife and he took up temporary residence in the farmhouse until 3 May 1985 when the farmhouse was sold. Mr Goodwin contended that the farmhouse was his only or main residence.

In the High Court, Sir John Vinelott drew heavily on the observations of Lord Denning and Widgery L.J. in Fox v Stirk, Ricketts v Registration Officer for the City of Cambridge [1970] 3 All ER 7, (see page 16) and he also quoted with approval the line taken by Brightman J in Sansom v Peay (52TC1). Sir John said,

‘Amongst the factors to be weighed by the Commissioners are the degree of permanence, continuity and the expectation of continuity. On the facts found by the Commissioners in this case…

…in my judgment, they were fully entitled to take the view that the farmhouse was used not as a residence but as mere temporary accommodation for a period that the taxpayer hoped would be brief and which in fact lasted some 32 days between completion of the sale to him and the completion of the sale by him.’

The Court of Appeal upheld the decision of the Commissioners and the High Court that Mr Goodwin had not established a residence in the farmhouse; it had merely provided temporary accommodation. Millett L J stated in the Court of Appeal,

‘What I derive from Viscount Cave’s speech is that the word ‘reside’ is an ordinary word of the English language and is eminently suitable for a lay tribunal such as the General Commissioners to apply.’

He went on,

‘they (the Commissioners) must be taken to have accepted the Revenue’s submission that the quality of the taxpayer’s occupation of the farmhouse did not have a sufficient degree of permanence, continuity or expectation of continuity to justify its description as residence.’

And later,

‘Temporary occupation at an address does not make a man resident there. The question whether the occupation is sufficient to make him resident is one of fact and degree for the Commissioners to decide.’

He went on to say,

‘The substance of the Commissioners’ finding taken as a whole, in my judgment, is that the nature, quality, length and circumstances of the taxpayer’s occupation of the Farmhouse did not make his occupation qualify as residence.’

Schiemann LJ added,

‘I agree with the judgment that has just been delivered. I accept, as did the Commissioners, the Crown’s contention that in order to qualify for the relief a taxpayer must provide some evidence that his residence in the property showed some degree of permanence, some degree of continuity or some expectation of continuity.’