CG64536 - Two or more residences: residences occupied under licence: invalid notices

CG64470+ explains that a residence only comes within Section 222 if an individual has a legal or equitable interest in the property. Prior to October 1994 we took a different view; that any property in which an individual lived was a residence, and that an individual who occupied a residence under licence, as well as owning another residence, could give a notice under TCGA92/S222(5) determining which was his main residence. This also meant that by beginning or ceasing to occupy a residence under licence there was a change in the combination of residences held which began a new period for which it was necessary to determine the main residence.

Our change of view was publicised in an article in the October 1994 issue of Tax Bulletin. This also explained what we would do in those cases where a notice had been given in accordance with our previous view, but which was no longer valid following the change of view. Such a notice could now be invalid for two reasons

• the notice nominated as the main residence was a residence occupied under licence

or

• it was made in respect of a period where a new combination of residences was held, but where the new combination was due to a residence occupied under licence.

An example of the second type of case would be where two residences were owned, but no notice had been given within the time limit. A further residence was then occupied under licence creating a new period in which to give a notice.

The treatment of invalid notices will depend on the date on which they were given, into which of the two categories above the notice falls, and whether the person giving the notice wishes it to be disregarded. For

• notices given after 16 October 1994, see below
• notices given on or before 16 October nominating a residence in which a legal or equitable interest is held, see below
• notices given on or before 16 October 1994 nominating a residence occupied under licence, see CG64541-64542
• invalid notices which the giver wishes to be disregarded, see below.

Invalid notices

A notice given after 16 October 1994 which relies for its effect on a residence occupied under licence, such as in the circumstances outlined above, is invalid and should not be accepted.

A notice given on or before 16 October 1994 in favour of a residence in which a legal or equitable interest is held, see CG64470+, should be accepted as valid. The residence concerned is the main residence for the period covered by the notice.

A notice in favour of a residence occupied under licence is to be treated as effective until 16 October 1994, but as lapsing on that date. Where there is only one other residence in which a legal or equitable interest is held that residence will become the only or main residence from 17 October and the normal rules of time apportionment etc apply accordingly, see CG64970+.

Where a notice lapses on 16 October 1994 under the above paragraph and there are two or more other residences in which a legal or equitable interest is held, a two year period for giving a new notice begins on 17 October 1994. The new notice can only take effect from 17 October 1994, unless there was an earlier change of residences for which the two year period for giving a notice has not yet elapsed.

We cannot insist that anyone is bound by an invalid notice. Where an assessment dependent on the notice is not yet final and conclusive an individual may ask for an election which relied for its effect on a residence occupied under licence, and which is not therefore valid, to be disregarded. In such a case the strict statutory rules are to be applied to the whole of the period affected. This means that a revised notice cannot be substituted for the invalid notice unless the time limit for the original invalid notice has not yet expired. Neither can the invalid notice be varied, see CG6451 O+, if it is to be disregarded.