Griffin v Craig-Harvey [1994] STC 54

Facts

  • The taxpayers owned a property comprised of two units within a single building, both held under one legal title.
  • The owners resided in one unit and rented out the other.
  • Upon sale, they claimed Private Residence Relief (PRR) for both units on the basis that each constituted a separate dwelling house.
  • The Inland Revenue considered the entire property as one dwelling house, granting PRR only for the occupied unit.
  • The High Court, presided over by Justice Vinelott, ruled that the property should be treated as a single dwelling for PRR purposes, due to the physical connection between the units and shared legal ownership.

Issues

  1. Whether separate living units within a single legal title and physical structure can each qualify as a distinct "dwelling house" for the purposes of Private Residence Relief.
  2. How physical configuration and legal ownership of a property affect eligibility for separate PRR claims on multiple units.

Decision

  • The High Court determined that both the physical layout and shared legal title meant the property must be treated as a single dwelling house for PRR purposes.
  • PRR was limited to the unit actually occupied by the taxpayers; the rented unit did not independently qualify for relief.
  • The judgment emphasized that physical division alone does not suffice—legal and structural factors are key in assessing PRR eligibility for split properties.

Legal Principles

  • "Dwelling house" under PRR provisions requires consideration of both physical configuration and ownership title.
  • Separate PRR claims on split units are viable only when units have distinct physical separation and legal ownership.
  • Precedent cases, such as Markey v Sanders [1987] STC 398 (separate titles granted individual PRR) and Bates v CIR [1985] STC 464 (annex with shared title treated as part of main house), demonstrate how variations in structure and title influence PRR outcomes.

Conclusion

Griffin v Craig-Harvey [1994] STC 54 established that, for PRR purposes, split units within a single property cannot each qualify as a separate "dwelling house" when held under a single legal title with physical links. Legal and structural factors are decisive, and professional advice is recommended for PRR claims involving split properties.

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