Where a property was demolished and a new house constructed on the same land, the First-tier Tribunal held that the new house and the original house were not the same dwelling-house for the purposes of principal private residence relief (PPR). This meant that, although the taxpayer had occupied the demolished house, occupation of the new house had to be looked at separately from occupation of the old house when considering whether the relief was available. In a split decision, the Tribunal held that the quality of the taxpayer's occupation while he camped out in the new house as it was being completed was not sufficient to make the property his residence.

On the issue of whether the houses were the same dwelling, the Tribunal came to its decision by the Tribunal judge exercising his casting vote. One tribunal member was of the view that, in circumstances where demolishing an original house and building a new one was a cheaper option than renovating and extending the old house, the new construction should be regarded as the same dwelling as the original one for capital gains tax purposes.

This decision is unsatisfactory in that the distinction made between a house newly constructed on the site of a house that has been completely demolished (where occupation of the original house is distinguished from occupation of the new house) and a property that is renovated or extended (where occupation of the upgraded house is treated as the same as occupation of the old house) will be hard to draw on some facts. (Gibson v HMRC [2013] UKFTT 636 (TC).)