fbpx

Commercial Property Investor Succeeds in CGT Appeal

30th September 2022 By

Losses incurred on the disposal of an asset can be set against future profits on other investments for Capital Gains Tax (CGT) purposes. As a First-tier Tribunal (FTT) ruling showed, however, behind that simple statement lie layers of complexity.

The case concerned a commercial property investor who purchased a property in 1989 for more than £1.3 million. A combination of high interest rates and a property recession, however, proved ruinous and he was constrained to sell the property in 1998 for £990,000. For CGT purposes, he sought to set that loss against the handsome profit he made on the sale of another property in 2015.

That deduction was, however, disallowed by HM Revenue and Customs (HMRC) on the basis that capital losses can only be carried forward to set against future gains if they are notified to HMRC within five years of the 31 January in the year following the year of assessment in which the loss arose. HMRC also issued the investor with a penalty, asserting that his deduction claim was carelessly inaccurate.

Upholding his challenge to those decisions, the FTT noted that he was not a meticulous record-keeper. He had only a partial understanding of complex tax matters and was someone who needed a lot of assistance with them. Although the document trail had long since gone cold, the FTT was satisfied that his then accountant had notified HMRC of his loss within the requisite time limit.

He was therefore entitled to deduct a loss of £412,126 from his CGT liability arising on the sale of the other property. The inaccuracy penalty was also overturned. A further penalty in respect of admittedly careless overstatement of expenses arising from the sale of the other property was confirmed in the amount of £6,627.

Source: Concious

Latest News

Tenants Can Purchase Freehold When Landlord Cannot Be Found

11th June, 2024 By

The Leasehold Reform, Housing and Urban Development Act 1993 gives qualifying leaseholders the right to join together to buy the freehold of their properties – a process known as collective enfranchisement. A recent case demonstrated that this right can be exercised even when the landlord cannot be found. The leaseholders of two flats in a terraced house wished to purchase it from the landlord, but were unable to ascertain his whereabouts and therefore could not serve notice on him under Section 13 of the Act. They therefore applied for an...

Court Refuses to Set Aside Divorce Order Applied for by Mistake

6th June, 2024 By

While the courts have a range of powers to set aside orders, they will only exercise them in limited circumstances. In a somewhat surprising case that has attracted much comment, the High Court declined to set aside a final order of divorce that had been applied for by mistake. A couple separated in January 2023, after more than 21 years of marriage. In October that year, while financial remedy proceedings were still ongoing, the wife's legal representatives inadvertently applied for a final order of divorce in respect of her instead...

Waiting Time for Grants of Probate Falls

3rd June, 2024 By

Following concerns last year about delays in processing probate applications, recent figures from HM Courts and Tribunals Service show that waiting times for grants of probate are continuing to improve. The average time from submission of a probate application to probate being granted fell to 11.3 weeks in March 2024, a decrease from 13.7 weeks in February and 13.8 weeks in January. This is the lowest figure since March 2023, when the average was 10.8 weeks. The longest waiting time since then was in November, at 15.8 weeks: that month,...

Late Appeal Against Tax Penalties Rejected

31st May, 2024 By

It is incumbent on taxpayers to make sure they fully comply with their obligations to file returns and pay any tax due. The point was illustrated by a recent case in which a taxpayer whose return had not been received by HM Revenue and Customs (HMRC) failed to persuade the First-tier Tribunal (FTT) that he should be permitted to appeal against the resulting penalties. On the evening of 31 January 2014, the man had completed his 2012/13 Income Tax return on HMRC's website. Shortly afterwards he went to Cyprus, and...