It's a decison with totally bonkers CGT consequences potentially (e.g. re ER which are sidestepped at para 55).
This must affect 1000s of people who've bought their homes off-plan (hopefully some large builders will club together to fund an appeal).
I don't normally read your cases a you rarely explain the key point of the case.
But I did look at this one, and wow.
To recap for those who don't have half an hour.
In the original case, HMRC decided that the time period for an off plan property started when the buyer paid their deposit, not when it was finished and occupied.
As a result they had a big gap in their PPR relief.
Tax payer disagreed and won at FTT
HMRC appealed, and somehow won the argument in their favour.
Which means that pretty much every single offplan PPR is potentially in trouble given the tax payers cant be living at an off-plan property.
Not sure what happened to ESC D49 (ie does this no longer exist when they scrapped them?) which I thought covered this situation for 12 months and more if there was good reason for the delay. Like the fact it was not built to throw in a pertinent example!
The judge I think correctly says that that point is not terribly relevant. However, her comments on subsale transactions are misconceived, since clearly a subsale would not get PPR in the 1st place for pretty obvious reasons, so she is comparing apples & pears there. Let's hope the taxpayer appeals & wins; otherwise it potentially creates a bit of a mess and the FTT decision was generally agreed to be a sensible result (the FTT judge is a very respectable intelligent judge - unlike some others).
Not much more gleaned from the link below, other than confirmation that this will cause a PPR CGT problem for all off-plan purchases:
indeed, that one!
Is that now defunct or something?
Or was the tax payers accountant worse than me? Poor guy!
This was incorrectly decided by both the FTT and the UTT. The FTT were wrong to disregard the application of s 28 in relation to s 222(7). The UTT were correct in that regard, but failed to consider s 28(2). The contract in question had a somewhat massive implied condition, which wasn't fulfilled until around November/December 2009.
Condition precedent or condition subsequent, though? Logically, it is a condition precedent, but legally ...?
Well given that a man cannot sell what he does not have, and cannot buy that which does not exist...?
Portia Nina Levin wrote: Well given that a man cannot sell what he does not have,
You agree to buy a house from me for £x, which I agree to build for you. No strings attached. Deal done. I subsequently fail to build the house, voiding the contract as a result - condition precedent or condition subsequent?
Is it going to be several storeys above ground level, with none of the storeys on which it is to be constructed even existing yet?
Is it just a pie in the sky, if you will?
I will build you (condition subsequent) a fourth-floor apartment, but only on the condition that someone will first build (condition precedent) the three storeys below it .
So, are you saying that the existence of the apartment block is a condition precedent?
I'm saying that it might be, depending on the circumstances. Generally, though, yes - until that 'condition' has been satisfied the parties to the transaction in question - namely, the builder, cannot fulfil his side of the contract.
I know where you're going with this - "I agree to build and sell you an apartment, but only on the condition that I do something else first."
Well, I suggest that the nature of the contract was we will sell you apartment 4.24 in this apartment block we have yet to build/develop.
However, I refer more specifically to subparagraph (5) of paragraph 2. In particular, the final sentence.
I'm not sure what point you're trying to make.
"we will sell you apartment 4.24 in this apartment block we have yet to build/develop" - but subject to a headlease being granted to us over the site. Perhaps they also inserted the nonensical condition "subject also to us constructing the apartments below yours"?
I'm more than happy to be put straight on this by a suitably qualified contract lawyer, but it strikes me that, depending on the actual wording of the contract, the granting of the headlease referred to might fall to be treated as a condition precedent, whereas the construction of the apartment (block) is a condition subsequent.
I agree that's a potentially good point assuming the headlease is being granted by someone other than the vendor (builder) who is an unconnected party over whom the vendor has no control.
However, if the only condition for the grant of the lease was completion of the building work by the landlord/developer then arguably it's within the control of one of the parties to the contract and so not conditional.
As counterargument you could just as well say that planning permission is within the control of the parties as the builder can always meet the necessary planning conditions if he really wants to!
This deemed date of disposal point has caused problems elsewhere and it is being harsh to be too critical of the FTT's pragmatic looking decision.