Whether jacked-up caravan a ‘dwelling-house’ within the meaning of section 29(1) of the Finance Act 1965, for the purpose of exemption from capital gains tax–Electricity, water and telephone connected–Sale of caravan on site–‘Only or main residence’–Exempt from tax–Appeal from general commissioners allowed
This was an
appeal by Hugh Broughton Makins by way of case stated from a decision of the
commissioners for the general purposes of the income tax for the division of
Ludlow, who had held by a majority of two to one that the appellant was
chargeable to capital gains tax.
The appellant,
an agricultural engineer, in 1970 purchased for £1,800 a plot of three-quarters
of an acre at Upper Birchill, Chardstock, near Axminster. Before completing the
purchase he had obtained detailed planning permission to erect a dwelling-house
on the property. He took up residence with his family in a caravan and began to
build the house, but little work on it took place. In 1973 he sold the property
and was assessed to capital gains tax by the commissioners in the sum of £6,542,
having appealed to the commissioners from a determination by the inspector of
taxes.
The appellant
appeared in person; Brian Davenport (instructed by the Solicitor of Inland
Revenue) appeared for the Crown.
Giving
judgment, FOSTER J said that Mr Makins moved on to the site in a caravan in
August 1970, and his house-building operation began in September 1970. He
levelled the site of his future intended dwelling-house and in his caravan he
provided essential services — water for the site and electricity for the
caravan, which rested on some supports. A telephone was installed. As far as
the dwelling-house was concerned no foundations were excavated and no concrete
was poured in. Mr Makins sold the property for £8,800 in May 1973. The
expenditure accruing at that date was £547 on the operations described. When
the assessment to capital gains tax was made Mr Makins objected that he had
nowhere else to live but in the caravan and that therefore it was a
dwelling-house within the meaning of the legislation and so not subjected to
capital gains tax. To this the inspector of taxes replied that the caravan was
a ‘chattel’ and not affixed to the land and that therefore it was not a
dwelling-house within the meaning of section 29(1) of the Finance Act 1965. The
commissioners had decided that the fact that Mr Makins had been living in the
caravan was irrelevant. A further submission by Mr Makins was that he had to
spend most of the money from the sale of the property for the purchase of
another property to live in.
The main
question which he (his Lordship) had to decide was whether the caravan was a
‘dwelling-house’ and whether, in the relevant period, it was the taxpayer’s
‘only or main residence.’ Rating cases
had been cited, in particular London County Council v Wilkins
[1957] AC 362 and Field Place Caravan Park Ltd v Harding [1966] 2
QB 484. In both those cases the court had been investigating the somewhat
different question whether or not a caravan on a pitch was to be rateable. A
different test had to be applied to decide whether a chattel could or could not
become a rateable hereditament. In the Field Place Caravan Park case
Lord Denning MR had said: ‘In parting with the case I would say that these
caravans with their pitches are very like small bungalows with their
gardens.’ Although a chattel was not a
rateable hereditament it might become so if it was used in conjunction with
land so as to form a unit with the land. Mr Makins had said he had his caravan
on blocks and that the wheels did not touch the ground. Mr Davenport had
submitted that section 29 was dealing with a dwelling-house, but that section
30 showed a contrast between movable property and a dwelling-house.
He (his
Lordship) thought that the very particular facts of the present case would not
apply to a great many others. When he looked at all the facts, the laying-on of
electricity, water and a telephone and also the fact that the wheels of the
caravan were off the ground, he could only come to the conclusion that the
caravan was a dwelling-house occupied by Mr Makins. He thought the general
commissioners had failed to ask the proper question. The appeal succeeded and
there would be judgment for Mr Makins with costs.
