Backdating capital gains tax
As mentioned, HMRC’s position on when the two-year time limit starts is that the main residence election must be made within two years from the date when there is a different combination of residences.
This point is set out in the capital gains manual at CG64495.
HMRC’s approach has not been universally accepted in the past, but HMRC’s guidance refers to the case Griffin v Craig-Harvey  STC 54 in support of its interpretation of the legislation, in which the High Court reached a broadly similar conclusion.
Thus they would have had until 30 September 2006 to make a main residence election.
It states: “(5) So far as it is necessary for the purposes of this section to determine which of 2 or more residences is an individual's main residence for any period— (a) the individual may conclude that question by notice to an officer of the Board given within 2 years from the beginning of that period but subject to a right to vary that notice by a further notice to an officer of the Board as respects any period beginning not earlier than 2 years before the giving of the further notice…” Residence Two key words here are ‘residences’ and ‘main residence’.
The fundamental requirement for making the election is that each property must actually be the individual’s residence for private residence relief purposes.
For example, in practice the opportunity for making the election will often be triggered by buying another property and occupying it as a residence.
However, the time limit does not necessarily run from the date on which the other property is acquired.
Search for backdating capital gains tax:
This variation can be backdated by up to two years from the date on which it is made.