Backdating capital gains tax
For example, HMRC states that an election cannot be signed by the taxpayer’s agent. In addition, HMRC’s guidance mentions spouses or civil partners who are living together, and refers to the legislation in TCGA 1992, s 222(6), which states that there can only be one residence or main residence for both of them, and that a main residence election affecting both spouses or civil partners must be made in writing and signed by both individuals.
Variations Once an election has been made, it can subsequently be varied by giving notice to HMRC.
The two-year period runs from the date that another property started to be used as a residence.
For example, in the Ellis case, having bought the property in 1999, the couple rented it out until August 2004.
They then occupied the property as a residence from 1 October 2004.
Thus they would have had until 30 September 2006 to make a main residence election.
However, in a recent First-tier tribunal case, it appears that HMRC were rather confused about the effect of the election.
The legislation concerning the election is contained in TCGA 1992, s 222(5).This variation can be backdated by up to two years from the date on which it is made.In practice, the facility to vary elections is sometimes used for planning purposes to optimise private residence relief.One can only speculate whether the tribunal would have awarded costs to the taxpayers, on the basis that HMRC had acted unreasonably.It does seem (to me at least) that an award of costs was justified.