Introduction
Private Residence Relief (PRR) is a capital gains tax exemption for gains from selling a home used as a main residence. Griffin v Craig-Harvey [1994] STC 54, a High Court case, looked at whether different living spaces within one property could each meet the requirements for this exemption. To decide eligibility, the rules and their use for properties with split sections must be checked. This case focused on the meaning of "dwelling house" under section 101 of the Taxation of Chargeable Gains Act 1992, specifically whether units under one legal ownership could be seen as separate dwellings for PRR. The outcome affects taxpayers trying to use PRR on properties split into multiple units.
Defining "Dwelling House" in Griffin v Craig-Harvey
The main issue in Griffin v Craig-Harvey was the meaning of "dwelling house." The taxpayers owned a property with two units, living in one and renting the other. They claimed PRR for both units when sold, stating each was a separate dwelling. The Inland Revenue saw the whole property as one dwelling house, limiting relief to the occupied unit. The High Court agreed. Justice Vinelott ruled the property should be seen as a single unit. He noted that while multiple dwellings could exist in one property, this case did not meet the needed conditions. Physical links between the units and shared legal ownership were key points. This case shows challenges in using "dwelling house" for properties with split layouts.
The Physical Split and Legal Ownership
The property’s structure and legal ownership were central to the court’s ruling. In Griffin v Craig-Harvey, both units were part of one building under a single legal title. This physical and legal connection led the court to treat the property as one dwelling house. The judge compared this to cases where units were separate buildings or had different titles. This difference shows how physical separation and separate ownership affect PRR claims. Split units alone are not enough; physical and legal details must also be checked. The case confirms that split units under shared ownership may not get separate PRR.
Outcomes for Split Properties and PRR Claims
Griffin v Craig-Harvey set rules for PRR claims on split properties. The ruling stressed checking each case’s specific details, especially layout and ownership. Physical splits alone do not guarantee separate PRR claims. This affects owners of split properties, showing the need to check legal and structural details before claiming relief. Getting tax advice is recommended to follow rules and prevent issues with HMRC.
Comparing Griffin v Craig-Harvey to Other Cases
Other rulings have formed PRR rules for split properties. In Markey v Sanders [1987] STC 398, two flats with separate titles qualified for PRR individually. This differs from Griffin v Craig-Harvey, where shared title led to one exemption. Bates v CIR [1985] STC 464 involved an annex connected to a main house under one title, treated as one dwelling. These cases show how legal ownership and physical links shape PRR results, matching Griffin v Craig-Harvey’s approach.
Steps to Take and Getting Help
Claiming PRR on split properties can be complex. Tax experts can check a property’s layout, ownership, and past rulings to see if it qualifies. They help prepare documents to support claims and answer HMRC questions. While Griffin v Craig-Harvey and similar cases give direction, each case needs individual review. Professional advice helps follow rules and increases the chance of successful claims.
Conclusion
Griffin v Craig-Harvey [1994] STC 54 explains how Private Residence Relief works for split properties. The High Court ruled a property must be assessed as a whole, looking at physical features and ownership. Split units do not always qualify for PRR; shared ownership and physical links are key factors. Comparing this case to others like Markey v Sanders and Bates v CIR shows how legal ownership and physical separation change results. Taxpayers should get professional help to apply these rules correctly and obtain the right exemptions.
