Residential relief

Our client sold a property previously occupied as her main residence but subsequently occupied rent-free by her daughter who was responsible for all household bills and on at least one occasion paid the buildings insurance which was billed to the owner (her mother). Mother continued to pay for property repairs.

HMRC have opened an enquiry. Main residence relief is agreed but our claim to residential lettings relief under TCGA 1992 s 223(4) has been rejected.

HMRC state that ‘let’ means ‘to grant the temporary possession and use of in consideration of rent or hire’. They do not accept that the payment of annual buildings insurance is sufficient to constitute commercial rent and reject the suggestion that if a rent payment is required it could be a peppercorn.

Apparently ‘the technical position is that where a lower than market rate of rent...