Rollover relief claim on house built on farm

The taxpayers had bought a farm Chapel Mains in 1994 and formed a partnership. In 2012 they sold the farm and bought a new one. The sale included a six-bedroomed property Chapel Grange which had been built for their son. The taxpayers argued that the property was a qualifying asset for rollover relief (TCGA 1992 s 152). HMRC refused the relief. The taxpayers appealed.

The First-tier Tribunal disagreed with the taxpayers that it had been ‘essential’ to build the property. This was because the building warrant had been in the names of the son and his wife; for years the taxpayers the son and their advisers thought the son had owned the property; the funding for the house was treated as a loan to the son in the partnership accounts; and it was marketed with 6.5 acres of land.

The judge said these...