Lewis (Inspector of Taxes) v Rook

JurisdictionEngland & Wales
Judgment Date05 December 1989
Date05 December 1989
CourtChancery Division

Chancery Division.

Mervyn Davies J.

Lewis (HM Inspector of Taxes)
and
Lady Rook

Mr Nicholas Warren (instructed by the Solicitor of Inland Revenue) for the Crown.

Mr David Milne QC (instructed by Mrs Susan Newlands) for the taxpayer.

The following cases were referred to in the judgment:

Batey (HMIT) v Wakefield TAX(1981) 55 TC 550

Edwards (HMIT) v Bairstow & Anor ELR[1956] AC 14

Markey (HMIT) v Sanders TAXTAX(1987) 60 TC 245; [1987] BTC 176

Williams (HMIT) v Merrylees TAXTAX(1987) 60 TC 297; [1987] BTC 393

Capital gains tax - Private residence exemption - Sale of gardener's cottage situated about 175 metres from residence - Whether private residence exemption available on disposal of cottage - Capital Gains Tax Act 1979 section 101 subsec-or-para (1)Capital Gains Tax Act 1979. sec. 101(1).

This was an appeal by the Crown against a decision of the general commissioners for Sevenoaks that a gain realised on the disposal of a gardener's cottage at some distance from the taxpayer's main residence attracted exemption from capital gains tax under the Capital Gains Tax Act 1979 section 101 subsec-or-para (1)Capital Gains Tax Act 1979, sec. 101(1).

In 1968 the taxpayer bought a property of 10.5 acres for £34,501 consisting of a substantial house with an adjacent coach-house, lawns, a vegetable garden and a gardener's cottage situated some 175 metres from the main house.

In 1979 the taxpayer, who was elderly and lived alone, converted the coach-house so that the gardener could move into it to be nearer to the main house in case she needed assistance. She sold the cottage for £33,000.

On the sale of the cottage the taxpayer claimed exemption from capital gains tax under Capital Gains Tax Act 1979 section 101 subsec-or-para (1)sec. 101(1) of the 1979 Act as a disposal of part of her private residence.

The Crown contended that although a separate ancillary building might be regarded as part of a taxpayer's residence, such a building would have to be situated within the "curtilage" of the main dwelling. A cottage 175 metres away did not satisfy that test.

Held, dismissing the Crown's appeal:

1. In considering whether the cottage was part of the taxpayer's dwelling-house the entity which in fact constituted the residence had to be determined. On the facts of the present case, the entity constituting the taxpayer's residence included the cottage because the taxpayer's style of life embraced use not only of the main house itself with its gardens but also of the cottage occupied by the gardener. The fact that the cottage was about 175 metres distant from the house was not of paramount importance in the context of the taxpayer's use of the property as a whole. (Batey (HMIT) v Wakefield TAX(1981) 55 TC 550 explained; Williams (HMIT) v MerryleesTAX[1987] BTC 393 followed.)

2. It was a matter of degree in every case whether a separate building did or did not in truth form part of the residence in question. It was not possible to say that the general commissioners' conclusion was inconsistent with the facts found.

CASE STATED

1. At a meeting of the commissioners held at Sevenoaks on 13 October 1988 Lady Beryl May Rosche Rook ("the taxpayer") appealed against the refusal by HM Inspector of Taxes ("the inspector") of a claim by the taxpayer for relief under Capital Gains Tax Act 1979 section 102sec. 102 of the Capital Gains Tax Act 1979 for the year ended 5 April 1980.

2. Shortly stated the question for our decision was whether relief from capital gains tax was available to the taxpayer upon the disposal of No. 1 Hop Cottages, Newlands, Crockham Hill, Kent on 30 August 1979 underCapital Gains Tax Act 1979 section 101 section 102sec. 101 and 102 of the Capital Gains Tax Act 1979 which give relief on the disposal of a private residence.

3. The taxpayer was represented by David Milne QC. The respondent was represented by Miss Suzanne James of the Office of the Solicitor of Inland Revenue. The taxpayer gave oral evidence before us.

4. [Paragraph 4 listed the documents proved or admitted before the commissioners.]

5. From the oral and documentary evidence before us we found the following facts:

  1. (2) on 6 June 1968 the taxpayer purchased the property known as Newlands, Crockham Hill, Kent for £34,501;

  2. (3) included in the purchase were two cottages known as No. 1 and 2 Hop Cottages (formerly an oast-house) on the south boundary of the property;

  3. (4) the total acreage of the property owned by the taxpayer on 30 August 1979 was 10.5 acres. The distance between the nearest points of No. 1 Hop Cottages and Newlands is approximately 569 feet (175 metres);

  4. (5) the main house Newlands has a large hall, an imposing landing, a very large dining room, a drawing room, a playroom, a further reception room making four in all, eight bedrooms, one used as a billiard room, a kitchen, a pantry, a scullery and a silver room;

  5. (6) No. 1 Hop Cottages comprised a dining room, a lounge, a kitchen, two bedrooms and a bathroom. No. 2 Hop Cottages next door had similar accommodation;

  6. (7) before the taxpayer purchased Newlands and No. 1 and 2 Hop Cottages, No. 1 Hop Cottages had been occupied by Mr and Mrs Foster. Mr Foster worked in the garden of the main house and Mrs Foster helped in the main house. When the taxpayer was on the point of completing the purchase of Newlands Mr Foster died. Mrs Foster remained at No. 1 Hop Cottages after the purchase but never worked for the taxpayer;

  7. (8) Mrs Foster paid the taxpayer a contribution of £1.121/2p per week which was the amount she had always paid ever since the taxpayer purchased the property. She paid this in respect of No. 1 Hop Cottages and in respect of No. 2 when she moved. She was 75 years of age at the time of the appeal hearing;

  8. (9) in early February 1973 Mrs Foster vacated No. 1 Hop Cottages and moved into No. 2 Hop Cottages. Since purchasing Newlands, the taxpayer had renovated No. 2 Hop Cottages (which at the date of purchase had no bathroom and outside sanitation). In February 1974 the taxpayer's gardener moved into No. 1 Hop Cottages. In February 1978 the gardener vacated No. 1 Hop Cottages;

  9. (10) by contract dated 30 August 1979 the taxpayer sold No. 1 Hop Cottages for £33,000. The sale proceeds helped to finance the conversion into residential accommodation of the coach-house which was immediately adjacent to the main house and which had previously been used for storing hay in the loft with two garages below. After vacating No. 1 Hop Cottages the taxpayer's gardener moved into the coach-house. The taxpayer was elderly, lived alone in the main house and needed someone close at hand; hence the reason for the gardener's move;

  10. (11) the greenhouses, tool shed and compost heaps used in connection with the main house garden were situated between the main house and No. 1 Hop Cottages and convenient to No. 1 Hop Cottages. The greenhouses and the potting shed were located approximately half-way between No. 1 Hop Cottages and the main house;

  11. (12) during the taxpayer's ownership of it, No. 1 Hop Cottages had never been screened from the main house so that the taxpayer could see the lights in the cottage and could flash a light if she needed help. She also had a ship's bell which she could ring and which could be heard from the cottage which she would use if she needed help. This had happened more than once. It was very convenient to come up through the garden to the house and it was not convenient by the road.

6. It was contended on behalf of the taxpayer:

  1. (2) that the separate buildings namely Newlands and No. 1 Hop Cottages could be regarded as a single dwelling-house as they formed a single entity. We were referred to the case of Batey (HMIT) v WakefieldTAX(1981) 55 TC 550 and the case of Williams (HMIT) v MerryleesTAXTAX(1987) 60 TC 297...

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3 cases
  • Honour (Inspector of Taxes) v Norris
    • United Kingdom
    • Chancery Division
    • 4 Marzo 1992
    ...v IR Commrs TAXTAX(1982) 56 TC 10; [1982] BTC 378 Langford Property Co Ltd v Goldrich ELR[1949] 1 KB 511 Lewis (HMIT) v Lady Rook TAXTAX[1990] BTC 9; [1992] BTC 102 (CA) Markey (HMIT) v Sanders TAXTAX(1987) 60 TC 245; [1987] BTC 176 Methuen-Campbell v Walters ELR[1979] QB 525 Williams (HMIT......
  • Lewis (Inspector of Taxes) v Rook
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 19 Febrero 1992
    ...by her of No. 1 Hop Cottages, Newlands, Crockham Hill, Kent on 30th August 1979. The judgment of Mervyn Davies J. is reported in [1990] S.T.C. 23. 2 The facts as found by the General Commissioners are set out in paragraph 5 of the Case Stated as follows: "(1) On 6th June 1968 the taxpayer ......
  • Mr William & Mrs Hazel Ritchie v The Commissioners For Her Majesty's Revenue & Customs, TC 05911
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    • First-tier Tribunal (Tax Chamber)
    • 24 Mayo 2017
    ...by Mrs McIvor on 10 June 2015. 35 156. In support of these propositions Mr Foxwell cited Lewis (HM Inspector of Taxes) v Rook (“Lady Rook”) 64 TC 567 as to the approach to the permitted area, Methuen-Campbell v Walters [1979] 1 QB 525 (“Methuen-Campbell”) on the meaning of “curtilage” (a te......

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