Taxpayer entitled to PPR exemption on basis of intention to occupy
An individual who bought and sold domestic properties while living in his parent’s home to care for his father, was entitled to the principal private residence (PPR) exemption on the profits on sale.
PPR relief from capital gains tax is available under s222 of the Taxation of Chargeable Gains Act 1992 in certain circumstances. If you sell a residential property and are liable to pay CGT, you must notify HMRC and pay the tax due. Failure to notify could lead to financial penalties.
What was the issue?
In Mark Campbell v HMRC [2025] UKFTT 00867, tax-payer Mark Campbell lived at his parents’ home and provided care for his father under an employment contract dated 5 April 2010. Between 2010 and 2016, Mr Campbell bought and sold four residential properties in succession. He did not notify HMRC following the sales.
When contacted by HMRC after the fourth sale, he sent a tax return and claimed PPR exemption from CGT in respect of each property on the basis that he was living in job–related accommodation; and intended in due course to occupy the relevant property as his only or main residence.
PPR
HMLR disputed that the PPR exemption applied and Mr Campbell was served with a Closure Notice, Assessments totalling of £67,933 and issued with penalties totalling £40,469.70 for “deliberate failure” to notify HMRC of tax liabilities.
The FTT has upheld his claim. Mr Campbell had proved his case for at least part of the period over which he had owned each property. Therefore, the entire gain on three of the properties qualified for the exemption. The FTT’s findings included:
• Ever since his father became ill in 2007, Mr Campbell had been provided with living accommodation in his parent’s home solely because he was caring for his father. That period included that in which he owned the properties he bought and sold.
• He could not have carried out his caring responsibilities if he had not lived in his parents’ home.
• Each time Mr Campbell acquired one of the three properties, he intended to occupy it in due course as his only or main residence and that intention continued. Based on the evidence, the FTT was satisfied on balance that the relatively short period of purchases/sales was not simply property speculation. Mr Campbell gave honest and reasonable explanations for his decisions to acquire and then sell each property
• Mr Campbell’s accommodation in his parent’s home was provided “by reason of employment”. This was necessary so that he could perform some of his duties under the employment contract.
Part of the gain on the fourth property did not qualify for PPR, but it was within his annual exemption for the year of disposal. The effect was that Mr Campbell was not liable to CGT for any of the properties.
What does this mean?
This scenario could play out more frequently with our ageing population and growing dependence on family members in old age. The decision gives important guidance for individuals with paid caring responsibilities who live with those they care for: where they sell property at a profit and could potentially be liable for CGT, the PPR exemption could apply if the criteria are satisfied.
It is important to take advice from specialist tax advisers to avoid assessment/reassessment for a tax liability and potential penalties.
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