Capital compensation

04 October 2011

Issue: 4324 / Categories: Forum & Feedback

A married couple invested £350,000 with a financial institution, but this had fallen in value to £200,000 within two years. The institutions agreed that the investment was not appropriate and paid compensation

In January 2007 a married couple placed £350 000 with a large financial institution relying on its expertise to choose an appropriate investment. By October 2008 the chosen investment had a surrender value of about £200 000.

The couple complained and in March 2011 without any court action being involved a capital payment of £91 000 was made to them.

I should be most grateful if readers can provide some practical advice and assistance in applying the correct capital gains tax principles to the original investment and the £91 000 in such circumstances. I have considered TCGA 1992 s 22 the Zim Properties case extra-statutory concession D33 and TCGA 1992 s 51(2).

I do not think that s 51(2) applies...

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