Point taken, although as you say, Lady Ingram used a nominee.
The problem I think is that the particular leaseholder owns an undivided share of the freehold reversion (so all freeholders make a part disposal on the grant of the new lease), rather than a 'slice' pertaining to the flat.
If HMRC are going to take the point, this is going to have some serious ramifications and it would appear that even the OTS have got it wrong.
There's no specific HMRC guidance, so if they go fishing I would have thought there's a good case for 'reasonable excuse' [limiting the time limit for assessment to 4 years] for what many just see as an extension to an existing asset rather than a surrender and regrant.
The article strongly suggests that part disposal treatment for surrenders and regrants can be challenged. I recall Sargaison v Roberts [1969] where the sale and leaseback was held to be a part disposal, but this is not the same.
It is possible to have two bites at the cherry using either of the s222 limbs. If a domestic building put up on the permitted area of garden & grounds, you might as well claim it under s222(1)(b) as this test ignores any history.
I'm not sure what you mean by 'combined effect'. There are two steps in my mind. There would be no restriction under s223 (to be contrasted if there had been no dwelling initially on the land as in Henke). The relief given under s223 is subject to s224(2) just and reasonable apportionment where there is a change in what is occupied as the individual’s residence. It is then a question of what is 'just and reasonable', which is perhaps influenced by the extent of the change? I would say is is not 'just and reasonable' to restrict PRR on a modest extension.
An enlargement is still a change to the existing dwelling. Perhaps the answer is that it is not 'just and reasonable' to restrict the relief where the whole of the dwelling has always been occupied. I can see the sense in this.
However, I would not be so confident with this line of thinking in my mansion example, but you appear to be saying that relief could be restricted if the original curtilage is extended?
Perhaps I am overthinking because I can find very little on it.
S224(2) refers to "a change in what is occupied as the individual’s residence" and "for any reason" seems to broaden its application.
If an individual 'downsizes' and converts the house into 2 flats, having occupied the whole house, and then lives in the ground floor flat and rents out the top floor flat, wouldn't S224(2) restrict the PPR under s223? It seems to me that an enlargement is in reverse.
What if I've lived in a modest dwelling located on a very large plot for the first 9 years of ownership and then build a big mansion and then sell within 1 year of residing in the larger house? Perhaps I wouldn't have the same house and would be in the same position as Paul Gibson [2013] TC03021 . If so, the extent of the alterations may become relevant.
I've also thought about whether an enlargement within the curtilage of the original sized house would help, but this principle seems to be confined to establishing whether ancillary buildings are part and parcel of the main dwelling.
My answers
Point taken, although as you say, Lady Ingram used a nominee.
The problem I think is that the particular leaseholder owns an undivided share of the freehold reversion (so all freeholders make a part disposal on the grant of the new lease), rather than a 'slice' pertaining to the flat.
If HMRC are going to take the point, this is going to have some serious ramifications and it would appear that even the OTS have got it wrong.
There's no specific HMRC guidance, so if they go fishing I would have thought there's a good case for 'reasonable excuse' [limiting the time limit for assessment to 4 years] for what many just see as an extension to an existing asset rather than a surrender and regrant.
The article strongly suggests that part disposal treatment for surrenders and regrants can be challenged. I recall Sargaison v Roberts [1969] where the sale and leaseback was held to be a part disposal, but this is not the same.
Thank you. I see S22(1)(d) is not treated as a part disposal under CG12955 further to the court's comments in Chaloner v Pellipar Investments Ltd.
I suppose it doesn't help when the reply is made to the person (whoops done it again!) rather than the question.
He's summarised it quite well though. I have learnt something today. Many thanks for all who have contributed.
I agree.
It is possible to have two bites at the cherry using either of the s222 limbs. If a domestic building put up on the permitted area of garden & grounds, you might as well claim it under s222(1)(b) as this test ignores any history.
Gardens are tested separately under s222. However, there can be some overlap, for example when a domestic building is constructed on it.
It can be part of the qualifying garden and grounds (if there's no business use) or part of the dwelling if also within the curtilage.
I'm not sure what you mean by 'combined effect'. There are two steps in my mind. There would be no restriction under s223 (to be contrasted if there had been no dwelling initially on the land as in Henke). The relief given under s223 is subject to s224(2) just and reasonable apportionment where there is a change in what is occupied as the individual’s residence. It is then a question of what is 'just and reasonable', which is perhaps influenced by the extent of the change? I would say is is not 'just and reasonable' to restrict PRR on a modest extension.
'Change' refers to an existing residence
So you consider full PRR in my mansion example (quality of occupation and s224(3) issues aside)?
An enlargement is still a change to the existing dwelling. Perhaps the answer is that it is not 'just and reasonable' to restrict the relief where the whole of the dwelling has always been occupied. I can see the sense in this.
However, I would not be so confident with this line of thinking in my mansion example, but you appear to be saying that relief could be restricted if the original curtilage is extended?
Perhaps I am overthinking because I can find very little on it.
S224(2) refers to "a change in what is occupied as the individual’s residence" and "for any reason" seems to broaden its application.
If an individual 'downsizes' and converts the house into 2 flats, having occupied the whole house, and then lives in the ground floor flat and rents out the top floor flat, wouldn't S224(2) restrict the PPR under s223? It seems to me that an enlargement is in reverse.
What if I've lived in a modest dwelling located on a very large plot for the first 9 years of ownership and then build a big mansion and then sell within 1 year of residing in the larger house? Perhaps I wouldn't have the same house and would be in the same position as Paul Gibson [2013] TC03021 . If so, the extent of the alterations may become relevant.
I've also thought about whether an enlargement within the curtilage of the original sized house would help, but this principle seems to be confined to establishing whether ancillary buildings are part and parcel of the main dwelling.