In Hezi Yechiel v HMRC [2018] TC06829 a property owner failed to prove sufficient quality of his occupation of his property in order to claim capital gains tax (CGT) Private Residence Relief (PRR). He did not cook there, his use of utilities was minimal, he did not bring his son there and had little furniture.

  • Mr Yechiel brought a residential property for renovation, intending to live their with his new wife.
  • The marriage did not succeed.
  • He physically stayed in the flat between April and July 2011.
  • He sold the property at a substantial gain and claimed CGT Private Residence relief (PRR).
  • HMRC denied relief on the basis that it did not agree that it had ever been the taxpayers only or main residence.
  • The taxpayer appealed to the First Tier Tribunal (FTT)

The FTT found that:

  • The taxpayer slept at the property, but did did not cook there, nor do his washing there. 
  • He had a bed and when he ate there (mainly takeaway food) he did so ‘standing up, in the car [therefore not in the house] or in bed: it was presumed that the house did not contain a chair or a table.
  • Minimal post was re-directed there.
  • He had a son who he saw on a regular basis who did not visit: a lack of visitors was understandable, the property was still undergoing work and was presumably not child proof.
  • The utility bills indicated minimal use of the property.
  • He spend significant periods of time during the day at his parents’ house, where his laundry was done and he ate a significant number of his meals there. 

The FTT considered that to achieve a ‘quality’ of his occupation this constitutes not only sleeping, but also periods of ‘living’, being cooking, eating a meal sitting down, and generally spending some periods of leisure there. In the round the residence did not have sufficient ‘quality’ for the property to qualify as an ‘only or main residence’.

Useful guides

Private Residence Relief
Provides a useful checklist for 'quality of occupation, trackes caselaw in this area, explains the rules and different elements of the UK's most valuable tax relief.

How to tax profits and gains on the disposal of UK property
An extremely useful and practical guide, especially for non-UK resident property owners with a timeline and table to show the different way property is taxed.

CGT Rates & Allowances
As it says

Hezi Yechiel TC06829 http://financeandtax.decisions.tribunals.gov.uk//Aspx/view.aspx?id=10794

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