PPR exemption - can it be due on a bigger area than 0.5 hectares?

PPR exemption - can it be due on a bigger area...

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An erstwhile client has reappeared after a few years with an interesting problem....

He and his wife have sold their house and adjoining land, in which they lived for 37 years, for building land. Planning permission was obtained by the purchaser over an 8 year period (after payment of an option fee some years ago). The plot consists of a semi detached house, substantial garden, outbuildings and a paddock.

The total area of the land was 1.226 hectares, so way over the 0.5 hectare normal exemption. This is split into 2 plots (the reasoning being that part of it was to be given to the sons in the future if the parents wanted them to build their own houses on the land). Plot 1, which includes the house, is 0.336 hectares, Plot 2 is 0.89 hectares. These are split as far as the Land Registry is concerned, nut not physically split in reality (ie not fenced off).

During the period of ownership the land was used in various ways, apart from general use as a garden and living space. The client's son kept horses on the land for 18 years (up to 4 at a time), and the client's parents lived on part of it in a static caravan. No rent was received from either party. No business activities have ever taken place on the land. Since the son left the property, my client continued to keep the horses there for a further 10 years.

Given that ostensibly the whole of the area was used by my clients (and the extended family), is there any mileage in claiming PPR on the whole area, rather than just the permitted area? Failing that, is it reasonable to assume that the exempted area can be the full 0.5 hectares, rather than just the 0.336 hectares in Plot 1?

Thanks in advance

Replies (6)

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Stepurhan
By stepurhan
29th Jul 2014 16:56

Another bolted horse

Advice beforehand may have helped them. Why do these people always come after the deed is done?

To claim land larger than the permitted area, you would have to demonstrate the garden was of a size in keeping with the house. The grander the house, the grander the garden that would be appropriate for it. This is a difficult argument to carry with HMRC in the first place, as the size or garden appropriate to the enjoyment of the house is subjective to a certain extent. If the house was a fairly normal semi-detached I'd say you are going to struggle to justify a garden of this size as being part of the PPR. The fact that the land has been clearly used for activities outside normal PPR use (albeit without rent received) is also likely to prove fatal to a claim.

The split into two plots at the Land Registry is likely to restrict you to plot one alone. Pushing up to the 0.5 hectare is slightly more arguable stance though.

 

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By dropoutguy
29th Jul 2014 20:38

IMO

The house doesn't sound as if it is such as to open the way for over half a hectare of exempt grounds.  You need to consider its size and character and what is required for its reasonable enjoyment.

 

What are you left with if you exclude the paddock?

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Replying to scalloway:
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By SJO2009
30th Jul 2014 09:01

House etc

Thanks for the comments.

If the paddock is excluded, then we are left with about 0.4 hectares. The best way forward has to be to attribute the larger share of the proceeds (we are talking 7 figures) to the PPR section, but no doubt this will go down to the valuation agency when HMRC get their teeth into it. We do have valuations which were undertaken some years ago when a lifetime mortgage was taken out on the property, but whether these will hold water is another matter, especially when looking at the increase due to planning permission - given that the paddock is far more easily developed than the house and garden. However, this is also subjective, given that the paddock is effectively landlocked as access to it is obtained via the drive of the house in the first instance....

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By dropoutguy
30th Jul 2014 09:58

Valuation

You should ask the client to get valuation apportionments as of the disposal date using a chartered surveyor.  These apportionments should be referred to in the computation supporting the Return.

Don't DIY and wait for the DV.

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Portia profile image
By Portia Nina Levin
03rd Sep 2014 10:13

The answer

is in CG64350: http://www.hmrc.gov.uk/manuals/cgmanual/CG64350.htm

You can have your half a Hector, but no more, not when you have only got a semi.

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By King_Maker
04th Sep 2014 11:12

IMHO, you have very little/no chance of persuading HMRC/DV of all the extra area being exempt.

I agree totally with dropoutguy that a qualified Valuer be engaged when the property is being sold - and the Valuer should be put on notice that he/she may have to argue that valuation with the DV.

 

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