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How long is a holiday for PRR purposes?

Client went on a year-long cruise. Did she severe her 'property occupation' for PRR purposes?

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I asked a question yesterday about PRR for my parents (stranded in NZ). (Thanks for the responses).

Another - a bit similar - query today.

Client went on an around-the-world cruise from 8 May 2017 to 25 May 2018. A very extravagent holiday, one might say, but a holiday nonetheless. HMRC say that holidays are not taken into account when looking at periods of absence for PRR purposes.

My question is? When is a holiday not a holiday? What turns a holiday into a period of absence?

Thanks.

Replies (13)

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By Tax Dragon
16th Mar 2021 10:53

Top of head answer (without much thought or any research): whether you have another place of residence while you are absent.

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By Software Seeker
17th Mar 2021 12:21

Maybe, if you consider a cruise ship as a place of residence...

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By lionofludesch
16th Mar 2021 11:43

When you move the furniture to somewhere else. Or have your tax return delivered to another address.

You can't define it. You have to take in all the factors. FWIW, I don't think your clients who were held captive in NZ could be said to have left their home in the UK. For me, they were still resident there, regarded it as their home even though it was inaccessible.

It's not all about physical presence.

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Replying to lionofludesch:
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By Software Seeker
17th Mar 2021 12:26

Thanks. Certainly no furniture moved to the cruise ship, nor was post directed there.

The query re. NZ was actually my parents (so, a different query). Thanks for your comments on this. They certainly hadn't formally left their home in the UK, nor was it being rented out in the interim (as they'd intended returning after a month). So maybe an argument to say that it doesn't count towards the 3-years 'for any reason' non-occupation.

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By Duggimon
16th Mar 2021 11:35

From HMRC's consultation document:
"A residence is the place where a person normally lives, their home, and has a
degree of permanence and continuity about it. This means, for example, that when a
person goes on holiday for a few weeks, PRR is not affected because the hotel where
that person is staying is not a residence of theirs."

How much of a degree of permanence and continuity would you regard their occupation of the cruise ship as having? Did they get mail forwarded there? What happened to their house when they were away?

It's not cut and dried, there will always be scope for different interpretations as each case is unique. You have to look at it yourself and decide how you interpret it. There isn't an actual definition of maximum holiday length.

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By lionofludesch
16th Mar 2021 11:42

Duggimon wrote:
What happened to their house when they were away?

That's a key point. If they rented it out for a year, it's not their residence as it's not available to them.

Loads of issues to consider.

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Replying to lionofludesch:
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By Software Seeker
17th Mar 2021 12:28

lionofludesch wrote:

Duggimon wrote: What happened to their house when they were away?

That's a key point. If they rented it out for a year, it's not their residence as it's not available to them.

Loads of issues to consider.

Thanks both. Yes, I too would consider renting out the home whilst away very important when trying to determine whether the holiday was a holiday or a period of absence.

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By Wycher
16th Mar 2021 12:56

I would agree with Lionofludesch as I have a client who has remained in New Zealand for almost a year unable to return due to covid situation (he is staying with his daughter), while absent he has had his son visit his house to collect post etc and the house has remained empty. I cannot see that this removes it as his PPR for this period as it is still clearly his home he is just forced to be absent.

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By Software Seeker
17th Mar 2021 12:32

Wycher wrote:

I would agree with Lionofludesch as I have a client who has remained in New Zealand for almost a year unable to return due to covid situation (he is staying with his daughter), while absent he has had his son visit his house to collect post etc and the house has remained empty. I cannot see that this removes it as his PPR for this period as it is still clearly his home he is just forced to be absent.

Thanks. Deemed residence (S223(3) TCGA1992) or actual residence (because ignored as it is a holiday)?

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By lionofludesch
17th Mar 2021 12:47

Software Seeker wrote:

Wycher wrote:

I would agree with Lionofludesch as I have a client who has remained in New Zealand for almost a year unable to return due to covid situation (he is staying with his daughter), while absent he has had his son visit his house to collect post etc and the house has remained empty. I cannot see that this removes it as his PPR for this period as it is still clearly his home he is just forced to be absent.

Thanks. Deemed residence (S223(3) TCGA1992) or actual residence (because ignored as it is a holiday)?

Jeez - you don't have to be physically present in the house all the time for it to be your residence. We'll be running scare stories about folk needing to keep a record of when they go to the pub (when they open) next.

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By Tax Dragon
16th Mar 2021 12:56

Duggimon's consultation document extract: "PRR is not affected because the hotel where that person is staying is not a residence of theirs" appears to support my top of head, unresearched response to a degree.

However, since 2015, there's been a statutory definition of "period of absence": s223(7B) defines it as "a period during which the dwelling-house... was not occupied by the individual as a residence." You also need to read s222B(1) and some of the other 2015 changes. All bets are off and all replies so far (including my opener) are basically wrong, because they ignore the 2015 law.

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Replying to Tax Dragon:
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By Software Seeker
17th Mar 2021 12:41

Tax Dragon wrote:

Duggimon's consultation document extract: "PRR is not affected because the hotel where that person is staying is not a residence of theirs" appears to support my top of head, unresearched response to a degree.

However, since 2015, there's been a statutory definition of "period of absence": s223(7B) defines it as "a period during which the dwelling-house... was not occupied by the individual as a residence." You also need to read s222B(1) and some of the other 2015 changes. All bets are off and all replies so far (including my opener) are basically wrong, because they ignore the 2015 law.

So holiday periods of any length are regarded as a period of absence and so count towards the 3-year absence limit? That can't be right. I'll do some digging. (and thanks for the heads up).

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Replying to Software Seeker:
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By Tax Dragon
17th Mar 2021 13:01

Software Seeker wrote:

So holiday periods of any length are regarded as a period of absence and so count towards the 3-year absence limit? That can't be right.

It could be right if that's what statute says. (I very much doubt it is what statute says. I've not worked it through - it's not as windy in these parts as it obviously is where you operate. I'd even forgotten it said anything at all. But the point is it does now include a definition, whereas before 2015 I don't think it did. So I think, now, you should have greater certainty.)

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