[2010] UKFTT 495 (TC)

TC00753

	Appeal number: TC/2009/15583

Appeal against discovery assessment – whether sale of apartment liable to Capital Gains Tax

FIRST-TIER TRIBUNAL

TAX 

	MR. ANTHONY METCALFE	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	Ms. J. Blewitt (TRIBUNAL JUDGE)							Mr. M. Atkinson (MEMBER)

Sitting in public at Leeds on  28 September 2010

Mr A. Metcalfe, unrepresented

Mr A. Hall, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	This is an appeal by Mr Metcalfe against the discovery assessment by HMRC in the sum of £9,495 as amended on 20 February 2009. The Appellant appealed by way of Notice of Appeal dated 28 October 2009. 
2.	By way of background, the Appellant owned three properties in 2003; 37 Everleigh Street, Leeds (“Everleigh”), 21 Landalewood, York (“Landalewood”) and Apartment 2.14 Westgate, York (“Westgate”), the latter property being the issue in this appeal. Everleigh was owned by the Appellant from 1990 until 29 July 2003, Landalewood was purchased by the Appellant on 13 June 2003 and sold on 13 January 2006 and Westgate was purchased off plan, and acquired by the Appellant on 11 October 2002 and sold on 27 March 2003.
3.	The issue for the Tribunal is whether or not Westgate is to be treated as the Appellant’s residence for capital gains tax purposes and consequently whether private residence relief is available upon its sale. 
4.	The Tribunal was helpfully provided with a bundle containing correspondence, legislation and case authorities. The Tribunal also had the benefit of hearing Mr Metcalfe give oral evidence.
5.	The Appellant accepted that a note of a meeting between Miss Ditchfield, an officer of HMRC and himself on 15 April 2008, contained within the bundle, was in the main, an accurate record of the account he had given. The Appellant confirmed to the Tribunal that he had moved into Westgate in approximately November 2002 from Everleigh. Westgate was furnished with carpets, fridge/freezer, cooker and washing machine, and the Appellant had purchased a bed from Argos. The Appellant did not install a telephone as he had the use of telephone at his place of work and a personal mobile telephone. The Appellant did not obtain a television licence as the television he had taken to Westgate did not work. The apartment was fuelled by electricity but not gas. The Appellant confirmed to the Tribunal that his partner had moved into Westgate with him but after a very short period had moved out as she did not like living in York and also because the distance from her family was too far to travel. The Appellant told the Tribunal that he had obtained a valuation of the property a number of weeks after moving in, and although he could not recall the date he believed it was sometime before Christmas of 2002, after which he placed the property on the market for sale. The Appellant stated that the valuation was not obtained days after moving in, and claimed to have been mistaken when saying this in a letter to HMRC dated 26 February 2007. The Appellant had previously provided HMRC with letters from Bryant Homes (the builder) and invoices for service charges and ground rent. An electricity bill had also been provided by the Appellant, which showed a particularly low level of electricity use over the winter months; namely £39.09 for the period 11 October 2002 to 27 January 2003. In evidence the Appellant contended that the apartment was very warm and had double glazing, and furthermore he worked long shifts which may account for such a low bill.  
6.	The Appellant asserted that he had bought the apartment with the intention of living permanently at Westgate, however after his partner moved out and he returned to work in Leeds, the Appellant stated he had a change of mind. The Appellant contended that he had made a number of “technical errors” by failing to notify his bank and the Council of a change of address, and stated that he had mistakenly assumed he would simply receive a council tax bill for his new premises in due course. When asked about a credit card application with a start date of 10 December 2002, the Appellant could not explain why the Everleigh address had been used on the application, but accepted that the documentary evidence relied upon by HMRC must be correct.
7.	HMRC did not accept the letters as evidence of the Appellant’s residence, but rather as confirmation of his ownership of the property. HMRC contend that the letters are circulars sent to all of the owners of the apartments at Westgate and therefore have limited value in establishing whether or not the Appellant resided at Westgate for all or part of the period of ownership. In the absence of any other documentary evidence provided by the Appellant, HMRC argue that the Appellant has not established Westgate as his place of residence.
8.	The Tribunal was referred to a number of cases, all of which were carefully considered. The case of Goodwin v Curtis (TL3548) was particularly helpful and bore a number of similarities to the present appeal. In reaching its decision, the Tribunal assessed the concept of residence with regard to the quality of the Appellant’s occupation of the apartment at Westgate, balancing the degree of permanence, continuity and expectation of continuity of that occupation.
9.	The Tribunal found as a fact that the Appellant’s written and oral evidence fell short of establishing that the Appellant had in fact ever resided at the apartment, the Tribunal having regard to the lack of any satisfactory evidence to support the assertion. The inference drawn by the Tribunal in respect of the electricity bill, which the Tribunal found was improbably small for the winter months and the Tribunal did not accept the Appellant’s explanation as credible. Even if the Tribunal was satisfied that the Appellant had, for a time, occupied the apartment at Westgate as his dwelling house, the question for determination is whether such occupation amounted to residence. The Tribunal did not accept that the Appellant had provided any evidence to show that the occupation of Westgate had any degree of permanence. The Tribunal found that the evidence pointed to the contrary in particular the facts that the Appellant had not notified his change of address to either his bank or Council and within either days or weeks of acquiring the property the Appellant had obtained a valuation with a view to selling. On those facts the Tribunal found that there was no degree of permanence and no expectation of continuity. The Tribunal therefore found that, at best, the Appellant had temporary occupation of Westgate, which was insufficient to amount to residence. In conclusion, taking into account all of the evidence, both written and oral, the Tribunal found that the nature, quality, length and circumstances of the Appellant’s occupation of the Westgate apartment was such that it did not amount to residence. 
10.	The appeal is dismissed.
11.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

TRIBUNAL JUDGE
RELEASE DATE: 15 October 2010