Living somewhere is not the same as residing there. Goodwin v Curtis establishes that private residence relief depends on the quality of occupation, a settled abode rather than temporary accommodation. The taxpayer lasted five weeks, and bought his next house two days after moving in.
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Full name: Goodwin v Curtis (Inspector of Taxes)
Citation: [1998] STC 475; [1998] BTC 176
Court: Court of Appeal (Millett LJ, Schiemann LJ and Sir Brian Neill)
Judgment: 18 February 1998
Subject: Private residence relief; what makes a property a “residence”
Result: The taxpayer’s appeal dismissed. Five weeks’ occupation was temporary accommodation, not a residence.
Why This Case Matters
Private residence relief is the most valuable relief in the capital gains code, and the most heavily enquired into. HMRC’s data on property transactions is full, and a pattern of short ownerships with PRR claimed on each attracts attention automatically.
Goodwin v Curtis is the authority that decides those cases. It establishes that occupation alone is not residence. What matters is the quality of the occupation, not its mere existence, and not its duration in isolation.
The Facts
Mr Goodwin had just separated from his wife. He moved into Hazleton Manor Farmhouse, a property connected with his farming interests.
He occupied it for approximately five weeks. Within two days of moving in, he purchased another property which he intended to live in as his main residence. He then sold the farmhouse and claimed private residence relief on the gain.
The General Commissioners found that relief was not available. The Court of Appeal upheld that determination.
The Ratio Decidendi
Where the test comes from
The Court drew on the approach to residence developed in other statutory contexts, including Lord Widgery’s formulation in Fox v Stirk concerning electoral registration. The concept of residence in ordinary language carries an idea of settled connection rather than mere physical presence.
Quality, not duration
The case is often summarised as holding that five weeks is too short. That is not quite right, and the distinction matters in practice. Duration is evidence of quality, not the test. A short period of occupation which was genuinely intended to be permanent, and which was cut short by an unforeseen event, can qualify. A long period of occupation which was always understood to be temporary may not.
What defeated Mr Goodwin was not the five weeks in itself, but the purchase of the next home two days in, which showed the occupation was never intended to be settled.
Obiter and Related Points
- Subjective intention. The Court’s observations about the weight to be given to the taxpayer’s stated intentions are commentary rather than rule. In practice tribunals treat asserted intention with caution and look to what the taxpayer actually did.
- The permitted area and other elements of the relief were not in issue and the case says nothing about them.
- Periods of deemed occupation and the final period exemption operate separately, and a taxpayer who fails the residence test at the outset cannot reach them. The property must have been a residence at some point for those provisions to apply.
- The relationship with trading. Where a property was acquired with a view to resale, the more fundamental question may be whether the profit is trading income at all rather than a chargeable gain, in which case PRR is irrelevant: see our resource on badges of trade and Edwards v Bairstow.
What Establishes Quality of Occupation
Because the test is evidential, these cases are won and lost on documents. HMRC will ask for them, and a claim supported only by assertion will fail.
Evidence that supports residence
- Council tax registration and payment, and the electoral roll.
- Utilities in the taxpayer’s name, with consumption consistent with actual living.
- Correspondence redirected: bank, employer, HMRC, medical practice, insurers, driving licence.
- Registration with a local GP and dentist, and children’s schooling where relevant.
- Home and contents insurance at the property as the main residence.
- Removal of furniture and personal effects to the property, evidenced by removal invoices.
- Mortgage terms consistent with owner-occupation rather than a bridging or development facility.
- Absence of any other property being occupied at the same time.
Evidence that undermines it
- Buying or arranging the next home very soon after moving in, the Goodwin fact.
- Marketing the property while living in it.
- Short-term or bridging finance.
- Correspondence still going to another address.
- A pattern of similar transactions across several years.
- Works consistent with preparing a property for sale rather than for occupation.
Practitioner Application
- Frame the argument as quality, not length. Explain what made the occupation settled and what the expectation of continuity was, then deal with duration as a secondary point.
- Explain any early departure with evidence. Relationship breakdown, job relocation, illness, a change in family circumstances. An unforeseen event that cut short a genuinely intended permanent occupation is the strongest version of the argument.
- Anticipate the next-purchase point. If the client bought or committed to another property while occupying, that will be the first thing HMRC raises. Have the explanation ready.
- Consider a nomination where two residences were held, and check the time limits, which are short and frequently missed.
- Deal with behaviour separately. An unsuccessful PRR claim on genuinely occupied property is not a deliberate inaccuracy. Under HMRC v Tooth that requires knowledge of the error and an intention that HMRC rely on it.
- Check the more fundamental question first. Where there is a pattern of buying, renovating and selling, HMRC may argue the profits are trading income, in which case PRR does not arise at all and the argument is a different one.
Frequently Asked Questions
How long must I live somewhere for private residence relief?
There is no minimum period, and asking the question that way is the wrong approach. Goodwin v Curtis holds that what matters is the quality of occupation, whether the property was occupied as temporary accommodation or as a settled abode, with some degree of permanence, continuity or expectation of continuity. Duration is evidence of quality, not the test.
Why did Mr Goodwin lose after five weeks?
Not because five weeks is too short in itself, but because within two days of moving in he purchased another property which he intended to live in as his main residence. That showed there was never any expectation of continuity at the farmhouse. It was a stopgap from the outset. The next-purchase point, not the duration, decided the case.
Can a short occupation ever qualify?
Yes, where it was genuinely intended to be permanent and was cut short by an unforeseen event: relationship breakdown, job relocation, illness, a change in family circumstances. That is the strongest version of the argument, and it needs evidence of both the original intention and the intervening event.
What evidence does HMRC want to see?
Council tax and electoral roll registration; utilities in the taxpayer’s name with consumption consistent with living there; correspondence redirected to the property from banks, employers, HMRC and medical practices; GP and dentist registration; home insurance naming it as the main residence; removal invoices; and mortgage terms consistent with owner-occupation rather than bridging finance.
If the PRR claim fails, does that mean a penalty?
Not automatically. An unsuccessful claim on a property the client genuinely occupied is not a deliberate inaccuracy, under HMRC v Tooth that requires knowledge of the error and an intention that HMRC rely on it. Where there is a pattern of buying, renovating and selling, however, expect HMRC to raise the more fundamental question of whether the profits were trading income at all.