Only or main residence relief on purchase of off-plan property

In 2006 the taxpayer entered into a contract to buy an off-plan apartment in a redevelopment of an old hotel in London. He had already paid a deposit and had to make a further 10% payment in March 2007. Completion took place in January 2010 and the taxpayer occupied it as his main residence until he sold it in December 2011. He claimed only or main residence relief on the gain under TCGA 1992 s 222.

HMRC accepted relief was due but said under s 28 the taxpayer’s ownership had begun in 2006 when he entered into the contract to acquire the property. Further under s 223 relief applied only for the period a property was occupied as a residence. So in the taxpayer’s case this would be from January 2010 to December 2011.

The First-tier Tribunal allowed the taxpayer’s appeal so HMRC appealed...