Higgins – Court of Appeal of England and Wales finds that the period of ownership of real estate did not commence until the closing of its acquisition
HMRC sought to deny the UK principal residence exemption to the taxpayer on the basis that he did not satisfy the statutory requirement that the apartment in question had been his “only or main residence throughout the period of ownership.” HMRC took the startling position that the period of ownership began running from the time that the taxpayer entered into an agreement to purchase the apartment – and it was not even constructed until about three years later – but with the taxpayer occupying it as his main residence only from the time of the closing onwards until its sale at a gain. In part, HMRC relied on a provision of general application which provided that the disposal and acquisition of an asset under a non-conditional contract occurred at the time the contract was made.
Newey LJ found that this deeming provision did not sufficiently inform what was meant by the “period of ownership,” and in rejecting HMRC’s position stated:
HMRC's case … runs counter to the ordinary meaning of the words "period of ownership". The expression would not naturally, I think, be taken to extend to the interval between contract and completion. A purchaser would, as a matter of ordinary language, be described as "owner" only once the purchase had been completed.
Similar issues can arise under the ETA as to the scope of s. 133, which generally deems a supply to made at the time the related agreement is entered into.
Neal Armstrong. Summary of Higgins v Revenue and Customs  EWCA Civ 1860 under General Concepts – Ownership.