Words and Phrases - "period of ownership"

In October 2006, Mr Higgins entered into a contract, for a purchase price was £575,000, to take a 125-year lease of an apartment in a project involving the conversion of a hotel into apartments. At the date of the contract, the area which was to become the apartment was "a space in a tower". The development was delayed by the 2008 credit crunch, and it was not until November 2009 that work began to construct the apartment and it was substantially completed physically the following month. The purchase was completed on 5 January 2010. Mr Higgins occupied the apartment as his main residence from 5 January 2010 until 5 January 2012. He contracted to sell the apartment on 15 December 2011 and the sale was completed on 5 January 2012.

The availability to Mr Higgins of the principal private residence relief from capital gains tax turned on whether he satisfied the requirement s. 223 of the Taxation of Chargeable Gains Act 1992 ("the TCGA") that the apartment “has been the individual's only or main residence throughout the period of ownership.” In finding that this requirement was satisfied, Newey LJ stated (at para. 21):

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. … Lord Walker said this on the subject in Jerome v Kelly [2004] UKHL 25 … at paragraph 32:

… Neither the seller nor the buyer has unqualified beneficial ownership. Beneficial ownership of the land is in a sense split between the seller and buyer on the provisional assumptions that specific performance is available and that the contract will in due course be completed, if necessary by the court ordering specific performance. In the meantime, the seller is entitled to enjoyment of the land or its rental income.

The mere fact that someone has contracted to buy a property will not give him "ownership" such as could allow him to possess, occupy or even use the property, let alone to make it his "only or main residence".

Newey LJ further found that s. 28 of the TCGA, which provided that the disposal and acquisition of an asset under a non-conditional contract occurred at the time the contract was made, did not “dictate the conclusion that the ‘period of ownership’ of a dwelling-house for the purposes of section … 223 must run from the date of the contract under which it was bought” (para. 25).