News added on 26.11.2019

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Tribunal powerless over application of extra statutory concessions

An appeal against HMRC’s application of extra statutory concession D49 has been struck out by the First-tier Tribunal because it does not have jurisdiction to review HMRC’s decision. What are the details?

Case facts. In White and White v HMRC the taxpayers (W) purchased four properties between June 2001 and March 2002 and turned them into a single property. Due to the time it took to purchase each property and undertake the conversion work, they did not move in until some time between September and November 2003. Where there is a delay in taking up residence of up to two years, extra statutory concession D49 allows HMRC to decide whether to grant private residence relief (PRR) for that period.  

HMRC’s decision. HMRC claimed that ESC D49 could not apply because W had exceeded the two-year limit. In its view the two-year period began when W obtained an interest in the first piece of land (June 2001). PRR only applied from the date the couple moved into their home and had a tax charge in relation to the period prior to that.

Appeal. W appealed to the First-tier Tribunal (FTT) and HMRC asked the court to consider whether it had the jurisdiction to review the application of an extra statutory concession. The appeal was struck out because the FTT found that it did not have the power to consider HMRC’s application of extra statutory concessions, which is subject to judicial review only.

This case should act as a reminder that extra statutory concessions are given at HMRC’s discretion. Finance Bill 2019-20 brings ESC D49 within the scope of the PRR legislation, so the FTT should be able to make decisions on this point in future.

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