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The taxpayer was one of around 20 customers to buy a gilt strip planning product. The scheme was designed to create a loss as a result of specified transactions in discounted securities.
The taxpayer claimed the loss in his self assessment tax return, but HMRC disallowed the claim.
The First-tier Tribunal said the gilt strip planning was implemented in the way intended by the parties involved. It had been devised to ensure that no real money reached the taxpayer.
The gilt strips remained under the control of the bank. The taxpayer suffered no loss, no sum paid to him for the gilt strips, and the strips were never transferred to him.
The tribunal concluded there was sufficient legal reality to prevent the transactions from being a sham, but equally they had no tax reality.
The taxpayer’s appeal was dismissed.
