Longson v Baker (Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 19 May 2000 |
| Date | 19 May 2000 |
| Court | Special Commissioners (UK) |
special commissioners decision
MR T H K EVERETT (SPECIAL COMMISSIONER)
Dr Geoffrey John Longson ("Dr Longson") appeals against two assessments to capital gains tax, the first for the year of assessment 1994/95 and the second for the year of assessment 1995/96. The assessments relate to Dr Longson's disposal of his beneficial interest in his former matrimonial home known as Velmead Farm and Stud, Church Crookham, Hampshire ("Velmead Farm") on 15 December 1995 to his former wife.
The date of disposal has been agreed between the parties as 15 December 1995. The question for my determination is agreed as follows:
What was the extent and location of "the permitted area" of land required on 15 December 1995 for the reasonable enjoyment of the dwelling-house at Velmead Farm as a residence, in regard to its size and character?
The evidence before me consisted of a memorandum of facts not in dispute supplemented by the oral evidence of Dr Longson. In addition Mr Brynley Powell gave evidence on behalf of Dr Longson as to his opinion concerning the optimum stock level for horses at Velmead Farm. Mr Peter Roger Guy Watson, ARICS, a Principal Valuer in the Valuation Office Agency, gave expert evidence on behalf of the Respondent Inspector. Mr Watson produced photographs and plans to which his report made reference. The reports of Mr Powell and Mr Watson will be available to the Court should these appeals proceed further.
From the evidence before me I find the following facts:
1. Until the failure of his marriage, some ten years ago, Dr Longson was a keen horseman although he did not come originally from an equestrian family. His interest in horses commenced in the early 1970s when he purchased a pony for his daughter Tanya. At that time Dr Longson and his family were living at Fraynes Croft, Fleet, Hants, a large house with seven bedrooms situated in an area of land amounting to approximately one and a quarter acres.
2. Dr Longson's interest in riding was shared by all his family; his wife, Tanya his daughter, who aimed eventually to become a keen competitor in three day event riding competitions and his son Mark who was to enter the Army via Sandhurst and who was to become polo player.
3. At Fraynes Croft Dr Longson and his family eventually stabled about seven horses in stables which they had built in the grounds of the house. At one and a quarter acres there was insufficient pasture to support so many horses at Fraynes Croft and fields were rented from nearby farmers. Accordingly Dr Longson's horses had to be transported to and from those rented fields in horse boxes. These tasks were undertaken mostly by Mrs Longson.
4. In 1979 Dr Longson was able to sell Fraynes Croft and purchased Velmead Farm for approximately the same price. Velmead Farm possessed stables and the property extended to 7.56 hectares (18.68 acres). The Longsons took with them stables from Fraynes Croft which they had built there and re-erected them at Velmead Farm on a concrete base.
5. The date of purchase of Velmead Farm by Dr Longson and his wife was 17 August 1979. The purchase price was £155,000 and it was occupied as their matrimonial home and was their only or main residence.
6. Velmead Farm is situated in the village of Church Crookham near Fleet in the County of Hampshire. The entrance to the property is via an unmetalled track off Watery Lane.
7. The dwelling-house at Velmead Farm comprised all the buildings round a central courtyard, namely the farmhouse on the west side, the building on the north side, described as an outhouse, and the stables on the east side. Those buildings which, it has been agreed between the parties, comprised the entity of the dwelling, are shown coloured pink on the plan which is marked as exhibit TP1. The full extent of Velmead Farm is shown on the same plan edged red.
8. Velmead Farmhouse is a detached property of considerable character and constructed of brick under a clay tile roof and including original timber framing. The main part of the house is believed to date back to the 16th century and was extended and modernised in the 1950s. It is Grade II Listed. Mains water, gas and electricity are connected to the property and drainage is to a septic tank.
The accommodation in the farmhouse comprised the following:
Ground floor: study, living room, dining room, kitchen, breakfast/diner, rear lobby and utility room, hallway, cloakroom and toilet
First floor: five bedrooms one box room, three bathrooms
The gross external area of the farmhouse is approximately 310 square metres (3,337 square feet).
The outbuildings at Velmead Farm comprised the following:
1. Single storey brick and tile stable block
2. Substantial brick and tile stable block with 13 loose boxes and store
3. Domestic garage with hay loft above
4. and 5. Two single storey timber/felt stable blocks with four loose boxes each towards the south-east corner of the property (known by the Longsons as "the OK Corral").
9. During the Longsons' ownership of the property Dr Longson arranged for the erection of an Atcost steel framed barn building clad with corrugated asbestos, used as an indoor riding school. The property also possessed two hay barns and a timber stable block together with a mound constructed in order to enable Tanya in particular to gain experience with her horses of mounting and descending such a feature, as required at some competition courses.
10. After the failure of his marriage, Dr Longson moved out of Velmead Farm during 1990 but Mrs Longson continued to live there until 23 December 1999.
11. Pursuant to a conditional agreement made on 5 April 1995, Dr Longson disposed of his beneficial interest in Velmead Farm to his wife. That agreement was subject to the decree nisi of divorce between Dr Longson and his wife being made absolute. Following the Consent Order of Judge Plumstead on 7 December 1995, this occurred on 15 December 1995, which date is agreed between the parties as being the date of disposal of Velmead Farm for the purposes of these appeals.
12. Pursuant to the conditional agreement made on 5 April 1995 the price payable for the asset was £1,250,000, subject to a price adjustment formula. In the event however, instead of the operation of the price formula, the consideration was amended by a compromise agreement made on 16 March 1998 between Dr Longson and his former wife to the fixed amount of £2,750,000 which is the agreed consideration between the parties to these appeals.
13. Normally this Tribunal is not concerned with the effects of extra-statutory concessions operated by the Inland Revenue, but in these appeals the Inland Revenue accept that Dr Longson is entitled to the benefit of extra-statutory concession D6 both in respect of the gain accruing on the disposal of his interest in the dwelling-house and the land occupied and enjoyed with that residence as its garden or grounds up to the permitted area. Accordingly, it is common ground in these appeals that Velmead Farm was deemed to be the only or main residence of Dr Longson until 15 December 1995 notwithstanding the fact he did not live there between 1990 and 1995.
14. On 16 March 1998, Mrs Longson disposed of her freehold interest in the entire property of Velmead Farm to Martin Grant Homes Ltd, pursuant to an agreement providing for...
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Longson v Baker (Inspector of Taxes)
...3Taxation of Chargeable Gains Act 1992, s. 222(3). This was an appeal by the taxpayer from the decision of a special commissioner ((2000) Sp C 238) dismissing the taxpayer's appeal against a capital gains tax assessment for the year 1995-96 on the disposal of his beneficial interest in his ......