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An update on the Higgins case on private residence relief

Gillian Banks of PwC follows up on her August 2017 article on the Higgins case regarding private residence relief, which has since been found in Higgins’ favour in the Court of Appeal.

HigginsI covered the First-tier Tribunal (FTT) decision in the case of Higgins in the August 2017 issue of TAXline. I thought the FTT had reached a common-sense decision, albeit perhaps a purposive interpretation of the law. This decision was overturned by the Upper Tribunal (UT) (R&C Commrs v Higgins [2018] UKUT 0280 (TCC)). But Mr Higgins appealed that decision and the Court of Appeal (CoA), in a unanimous judgement, has recently found in his favour (Higgins v R&C Commrs [2019] EWCA Civ 1860).

In 2004 Mr Higgins paid a modest deposit to reserve an apartment that was to be built in a property that had previously been a hotel. He exchanged contracts in October 2006, paying further deposits then and in March 2007. The apartment did not exist at that time. It was, as the FTT put it, “a space in a tower”. He eventually completed the lease contract shortly after the building of the apartment was finished, in January 2010, and then started to occupy the property as his main residence. He lived there until he sold the apartment in January 2012.