Estoppel denied

The appellants sold a property which had been given to them by their mother to an unconnected third party for £190 000. The building had been let out as fully furnished bedsits.

They claimed 75% business asset taper relief on the property. HMRC said that it was a non-business asset therefore non-business asset taper relief applied in this instance amounting to 70%.

After opening an enquiry into the taxpayers’ 2005/06 tax returns HMRC issued a closure notice. It stated that non-business asset taper relief should be applied to the gain and also that income returned as partnership profit was land and property income rather than income from a trade.

With regard to the latter point the taxpayers’ accountant said HMRC had agreed to the income being treated as from a trade although the only correspondence he had in relation to this...