Timothy Bunting v The Commissioners for HMRC
[2024] UKFTT 275 (TC)
Abigail Tan v The Commissioners for HMRC
20 March 2024
[2024] UKFTT 238 (TC)
First-tier Tribunal
Someone tried to claim tax relief on worthless shares they got by converting a loan. The court said the shares were worthless from the start, so no relief was allowed. They also tried a last-minute different argument, but the court refused to hear it because they waited too long.
Key Facts
- •Abigail Tan appealed HMRC's disallowance of negligible value claims for shares in Kleos (Holdings) Ltd (KHL).
- •Tan claimed losses on the disposal of shares in KHL, which she acquired through a loan conversion.
- •HMRC argued the shares were worthless at the time of acquisition, preventing a negligible value claim.
- •Tan's evidence was deemed unreliable and contradicted by contemporaneous documents.
- •KHL's financial statements showed the funds provided by Tan were loans, not equity contributions.
- •Tan's late attempt to argue for relief under s.253 TCGA was rejected as a very late amendment.
Legal Principles
Negligible value claim under s.24 TCGA requires the asset to 'become' of negligible value while owned by the claimant.
Taxation of Chargeable Gains Act 1992 (TCGA)
Section 251(3) TCGA limits the acquisition cost of shares acquired by a creditor in satisfaction of a debt to their market value at the time of acquisition.
Taxation of Chargeable Gains Act 1992 (TCGA)
Under s.50 Taxes Management Act 1970, the burden of proof lies with the Appellant to demonstrate that the conclusions stated in the CNs are incorrect.
Taxes Management Act 1970
Very late amendments to grounds of appeal will not be permitted unless there is a good explanation and justice requires it.
Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm)
Outcomes
Appeal dismissed.
Tan failed to meet the conditions for a negligible value claim under s.24 TCGA because the shares were already worthless at the time of acquisition. Her late alternative argument under s.253 TCGA was also rejected.