Longson v HM Inspector Of Taxes

For the enlarged permitted area under the Taxation of Chargeable Gains Act 1992, s 222(3), the question is objective. Having regard to the size and character of the dwelling-house, the larger area must be required for its reasonable enjoyment as a residence. Personal wishes, desires or intentions do not determine the enquiry. Land may be desirable or convenient to enjoy with a house, but that is insufficient. The statutory words “as a residence” limit the exemption, even where the property includes extensive equestrian facilities.

Dr Geoffrey Longson appealed against capital gains tax assessments arising from the disposal of his former matrimonial home and adjoining land. A Special Commissioner dismissed his appeal on 8 May 2000. Evans-Lombe J dismissed his appeal on a point of law on 16 November 2000; that judgment was reported at [2001] STC 6. The Court of Appeal considered an application for permission to bring a second appeal. The central issue was whether the whole 7.56-hectare property was required for the reasonable enjoyment of the dwelling-house as a residence under s 222(3).

The Court of Appeal unanimously refused permission to bring a second appeal.

1. Second appeal. Under s 55 of the Access to Justice Act 1999, a second appeal is permissible only where it raises an important point of principle or practice, or there is some other compelling reason. The practical question in this application was whether Dr Longson had any realistic prospect of success.
2. Objective statutory test. Section 222(3) of the Taxation of Chargeable Gains Act 1992 requires an objective assessment. The Commissioners must consider the size and character of the dwelling-house and decide whether an area exceeding the standard half-hectare permitted area is required for its reasonable enjoyment as a residence.
3. Residential focus. The enquiry is directed to the house and its relevant characteristics, not to the wishes, desires or intentions of a particular owner. The words “as a residence” carry substantial weight. A larger area is not qualifying merely because it is desirable or convenient to have it with the house, or because the property supports the owner’s equestrian interests.
4. Application and order. The Special Commissioner accepted evidence that the land provided grazing for fewer horses than the stables could accommodate, but regarded that evidence as irrelevant to the statutory question. The Court of Appeal held that the Commissioner and Evans-Lombe J were plainly right. A further appeal would be hopeless, and the application was refused.

1. Court of Appeal (Civil Division): Permission to bring a second appeal refused.
2. Chancery Division: Evans-Lombe J dismissed the appeal from the Special Commissioner’s decision on 16 November 2000; judgment reported at [2001] STC 6.
3. Special Commissioner: On 8 May 2000, Mr THK Everett dismissed the appeal against the capital gains tax assessments.