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In March 2002 the taxpayer took part in a tax-planning scheme whereby he transferred ownership of his main residence and £250 000 in cash to a family trust in exchange for a loan note from the trustees.
The house was valued at £1.8 million. The loan note was a relevant discounted security for the purposes of FA 1996 Sch 13. No interest was payable and the taxpayer was entitled to £2.45 million on redemption in March 2062.
Three days after receiving the loan note the taxpayer transferred it to the trustees of a second family trust. The actuarial valuation of the note on that date was £35 700.
In his self assessment tax return for 2001/02 the taxpayer claimed a loss of £2 014 300 on the disposal of the...
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