Income or capital gain?

The appellant and D formed a property consortium. The appellant sold 10% of his 50% share in the consortium to S for £500 000.

He described this in his self assessment tax return as a sale of his interest in the goodwill of the consortium and a capital asset that qualified for business asset taper relief under TCGA 1992 Sch 1A para 5.

HMRC opened an enquiry into his return and subsequently issued a closure notice amending the return so that the amount was chargeable under Schedule D Case I. The taxpayer appealed.

A preliminary issue arose as to whether following Tower MCashback LLP1 v CRC [2008] STC 3366 HMRC were entitled to contend for other tax treatment in the light of their having issued a closure notice on the basis that tax was due under Schedule D Case I.

The Special Commissioner decided...