Navigating the complexities of property transactions and capital gains tax (CGT) liabilities requires the expertise of seasoned chartered accountants. A recent high-profile tax case involving a multimillion-pound property in Chelsea underscores the importance of understanding Principal Private Residence (PPR) Relief and the potential risks of non-compliance with HMRC regulations.
This article delves into the intricacies of PPR Relief, drawing insights from the Eyre case, and highlights how Co-gency Chartered Accountants assists clients in Swinton and Salford in managing their tax obligations effectively.
What Is Principal Private Residence Relief?
Principal Private Residence (PPR) Relief is a capital gains tax relief available to individuals who sell their main residence. If a property qualifies as your principal residence for the entire period of ownership, the gain made upon sale is generally exempt from CGT.
However, determining what constitutes a “main residence” can be complex. HMRC considers several factors, including:
- The duration of occupancy
- Voter registration and correspondence addresses
- Utility bills and bank statements
- Furnishing and occupancy status
- Evidence of intention to reside
Failure to meet the necessary conditions can result in significant tax liabilities. For detailed guidance, refer to HMRC’s Private Residence Relief helpsheet.
The Eyre Case: A £3.3m Capital Gains Tax Challenge
In a notable case, Raymond and Diana Eyre purchased a £10 million property in Chelsea in 2010. After demolishing the original structure and constructing a luxurious six-bedroom home, they sold it for £27.15 million in 2014. HMRC issued a combined CGT assessment of over £3.3 million, arguing that the sale was part of a trade venture rather than a private residence sale.
The Eyres contended that the Chelsea property was their principal private residence and that the gain should be exempt. They had:
- Notified HMRC of the PPR change
- Registered to vote at the address
- Moved personal belongings, including a substantial wine collection
- Commissioned custom designs for family use
- Resided in the property after completion
HMRC argued that the couple intended to resell from the outset, especially given their agreement with a development company that would share in any profits. However, the First Tier Tribunal ruled in favour of the Eyres, acknowledging their genuine intention to make the property their home.
Key Lessons for Property Owners and Investors
1. Intent and Documentation Are Crucial
While physical occupancy is essential, HMRC also scrutinises the intent behind a property purchase. In the Eyre case, despite the relatively quick sale, the tribunal accepted their genuine intention to reside in the property.
Property owners in Swinton and Salford undertaking significant renovations or moving between residences must clearly document their intent. This includes maintaining records such as:
- Utility and council tax bills
- Electoral roll registration
- HMRC correspondence
- Evidence of moving personal effects
For more information on nominating a property as your main home, visit HMRC’s guidance on nominating a home.
2. Distinguish Between Investment and Personal Use
The case illustrates the fine line between a personal residence and a development project. Collaborating with a development partner, as the Eyres did, can raise concerns. If you’re refurbishing or building a property in the Manchester area, particularly in rapidly developing areas like Salford Quays or central Swinton, it’s vital to clarify whether your aim is resale or residence.
At Co-gency Chartered Accountants, we assist clients in making tax-efficient decisions that withstand HMRC scrutiny.
3. Seek Advice from Qualified Tax Advisors
The Eyres’ successful appeal was supported by an experienced legal team and accounting advisors, highlighting the importance of specialist input, especially when dealing with high-value assets or complex scenarios.
Our tax services encompass personal tax planning, CGT support, and PPR advice tailored to clients across Swinton, Salford, and Greater Manchester. We help clarify tax positions early—before disputes arise.
How Co-gency Chartered Accountants Can Assist
At Co-gency Chartered Accountants, we provide bespoke accounting and tax advisory services for individuals, landlords, developers, and high-net-worth clients. Our team supports clients across the Swinton and Salford area with:
- Capital gains tax planning and reporting
- Determining PPR eligibility
- HMRC dispute resolution and appeals
- Structuring property sales and transfers
- Strategic tax efficiency reviews
Whether you’re renovating a second home, selling a buy-to-let investment, or managing a property portfolio, we ensure your financial strategies are both compliant and optimised.
Explore our full range of services or contact us to schedule a consultation.
Final Thoughts
The Eyre case serves as a powerful reminder that even well-resourced taxpayers can face serious scrutiny from HMRC. Understanding and applying tax reliefs correctly is essential to avoid unexpected liabilities.
For expert advice on capital gains tax, PPR relief, or any other complex tax matter, consult with Co-gency Chartered Accountants—serving Swinton, Salford, and the wider Manchester area with clear, strategic, and compliant financial solutions.