OWEN Vs. ELLIOTT (INSPECTOR OF TAXES).

JUDGEMENT

(1.) The hotel received two types of guests for reward : (1) those who came for short -term stays, that is to say, two weeks or less, during the summer season between Easter and the end of September -some guests in fact stayed for rather longer periods than two weeks -and (2) guests who came in the period from October to Easter, the low season. These guests were often from abroad and stayed, on an average, for three to four months. However, they could if they wished stay on into the summer season if they paid the summer rates. During the summer season the taxpayer and his family occupied the annexe; the main building was occupied by the guests. In the low season the Owens occupied the whole of the building, together with their guests, who were rarely more than one or two in number.

(2.) On March 24, 1982 the whole property was sold. It had been agreed between the taxpayer and the inspector that one -third of the gain arising on the sale of the hotel should be treated as exempt from capital gains tax under sections 101 and 102 of the Capital Gains Tax Act 1979. Those sections confer an exemption in respect of a gain accruing to an individual so far as attributable to the disposal of a dwelling house which was at any time during his period of occupation his only or main residence. Section 80 of the Finance Act 1980, with which this case is primarily concerned, introduced, however, a further relief. Section 80(1) provides :

(3.) Where a gain to which section 101 of the Capital Gains Tax Act 1979 (disposals of private residences) applies accrues to any individual and the dwelling house in question or any part of it is or has at any time in his period of ownership been wholly or partly let by him as residential accommodation the part of the gain, if any, which, apart from this section would be a chargeable gain by reason of the letting, shall be such a gain only to the extent, if any, to which it exceeds the lesser of [two amounts].