TC09585 - [2025] UKFTT 00867 (TC)

The UT (Judges Thomas Scott and Guy Brannan) issued its decision on 3 November 2023 under neutral citation [2023] UKUT 00265 (TCC) (the “UT Decision”).

The UT began by addressing the Respondents’ cross–appeal because, if that were to succeed, it would have significant ramifications for the Appellant’s grounds of appeal. In relation to the cross–appeal, the UT determined that the FTT had made no error of principle in concluding that the Appellant had not disposed of the Properties in the course of a trade. It therefore dismissed the cross–appeal – see paragraphs [37] to [50] of the UT Decision.

The UT then turned to the Appellant’s grounds of appeal.

In relation to Ground 1, the UT noted that the Appellant had not appealed against the FTT’s conclusion that none of the Properties had been his only or main residence at any time. Instead, the Appellant was claiming that the principal private residence exemption from CGT was available in relation to each Property because he had been living in JRA. In order to succeed in that claim in relation to a Property, the Appellant needed to establish that:

The UT concluded that the FTT had wrongly conflated the first and second elements of the JRA Condition (referred to in paragraphs 19(1)(a) and 19(1)(b) above). It had failed to direct itself to the correct tests and had taken into account irrelevant factors – see paragraphs [68] to [83] of the UT Decision.

As regards the Intention Condition, the UT concluded that, whilst the FTT had considered the Appellant’s intentions as regards each Property when it was dealing with the multi–factorial question of whether or not the relevant Property was the Appellant’s only or main residence, it had not considered the Appellant’s intentions as regards each Property when it was considering the applicability of the principal private residence exemption based on the existence of JRA. In the latter case, the Intention Condition required the Appellant’s intentions as regards the relevant Property to be considered in isolation and not intermingled with other findings in relation to whether or not the relevant Property had been the Appellant’s only or main residence. Thus, the FTT’s findings in relation to the Appellant’s intentions as regards each Property in the context of determining that none of the Properties qualified for the principal private residence exemption from CGT based their being the Appellant’s only or main residence could not be safely transposed for the purposes of considering the Intention Condition in the context of the principal private residence exemption from CGT based on JRA. In addition, it was sub–optimal that the appeal had been dealt with on the papers without a hearing because that meant that the witnesses could not be examined or cross–examined – see paragraphs [84] and [85] of the UT Decision.

The UT considered that the errors of law described above were material so that the FTT’s decision in relation to the applicability of the principal private residence exemption based on the existence of JRA should be set aside.

It went on to say that the issue to which Ground 1 related should be remitted to a differently–constituted FTT, which should determine, in the light of the law as expressed by the UT and on the basis of the findings of primary fact found by the FTT in the FTT Decision (although not inferences drawn from those primary facts) and the evidence adduced by the parties at the further hearing, in relation to each Property, whether:

The UT remitted the appeal on the above basis in relation to all four Properties, even though it recognised that, in the hearing before the FTT, the Appellant had conceded that 2 Bramshill Close had never been his only or main residence and had not sought to rely on the existence of JRA to justify the application to that Property of the principal private residence exemption from CGT. The UT took that approach because it considered it to be sensible and in accordance with the overriding objective – see paragraphs [55] and [89] of the UT Decision.

In relation to Ground 2, the UT concluded that the FTT had made no error of law in relation to the validity of the Discovery Assessments and dismissed the appeal under Ground 2 – see paragraphs [93] to [107] of the UT Decision.

In relation to Ground 3, the UT concluded that the FTT had made a material error of law in concluding that the Penalties should be upheld on the basis of deliberate behaviour. The three reasons which the FTT had given for reaching that conclusion were insufficient to justify that conclusion. Accordingly, it set aside the FTT’s decision on that issue – see paragraphs [108] to [120] of the UT Decision.

In relation to Ground 4, the UT concluded that the FTT had simply described the bases on which the Respondents had assessed the Penalties without considering whether the Respondents’ approach was flawed and without giving any reasons for upholding the Penalties in the amounts assessed. That was a material error of law which justified setting aside the FTT’s decision – see paragraphs [121] to [127] of the UT Decision.

It went on to say that the issue to which Grounds 3 and 4 related should be remitted to a differently–constituted FTT, which should determine, in the light of the law as expressed by the UT and on the basis of the findings of primary fact (although not inferences drawn from those primary facts) found by the FTT in the FTT Decision and the evidence adduced by the parties at the further hearing whether: