Owen v Elliott (Inspector of Taxes)
[1990] STC 469(Judgment by: Leggatt LJ)
Owen
vElliott (Inspector of Taxes)
Judges:
Fox LJ
Parker LJ
Leggatt LJ
Legislative References:
Finance Act 1980 - s 80(1)
Capital Gains Tax Act 1979 - s 101; s 102
Capital Gains Tax Act 1979 - s 101
Finance Act 1980 - s 80
Judgment date: 27 April 1990
Judgment by:
Leggatt LJ
I also agree, and for the same reason as Parker LJ I shall briefly say why I do in words of my own. In ss 101 and 102 of the 1979 Act, the concept of occupation as a home is derived not from the use of the term 'residence' by itself, but from its use in the phrase 'his only or main residence'. In my judgment the expression 'residential accommodation' does not directly or by association mean premises likely to be occupied as a home. It means living accommodation, by contrast, for example, with office accommodation. I regard as wholly artificial attempts to distinguish between a letting by the owner and a letting to the occupant; and between letting to a lodger and letting to a guest in a boarding house; and between a letting that is likely to be used by the occupant as his home and one that is not.
It is difficult to see either the merit or the application of the Crown's test, adopted by the judge, of 'likely to be used as a home'. That is not something that can be gauged objectively from the nature of the letting without regard to the occupant. There is, in my judgment, no justification for excluding hotels from the scope of the exemption from tax unless a test for distinguishing between hotels and other forms of residential accommodation can properly be derived from the use of that expression in s 80 of the Finance Act 1980. None can. No relevant distinction can be drawn between a letting to an undergraduate or nurse or lodger, such as the judge thought would be entitled to relief, and a letting to anyone else. All are lettings of residential accommodation indistinguishable from that which is provided by boarding or guest houses or indeed by hotels, and all are conducted on what the judge called 'a commercial basis' (at 49). They differ from each other, if at all, only in the average length of letting, but it is accepted on behalf of the Crown that the length of the letting is not determinative. This conclusion will not result in relief being extended to a taxpayer the whole or part of whose dwelling house is exclusively used as an hotel or a boarding house. It will apply only where a dwelling house has at any time been used wholly or partly for that or a like purpose by a person whose only or main residence it is.
In my judgment, the judge's test is not warranted by its legislative context, nor would it be a practicable test to apply. Since there is no limitation imposed by the statute on the scope of residential accommodation entitled to relief, I too would allow the appeal.