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The taxpayers were shareholders in a public company in the IT industry which raised £20 million capital to develop an IT business network within the pharmaceutical industry.
But it had to abandon the acquisition of one company and instead agreed to fund another D provided funding from elsewhere could be found.
The taxpayers made a £10 million investment in D in December 2000; just over a year later in January 2002 the business became insolvent.
The taxpayers claimed their shares in D had become of negligible value by April 2001 for the purposes of TCGA 1992 s 24(2). HMRC refused the claims; the taxpayers appealed.
The First-tier Tribunal ruled that the test for a claim under s 24(2) was whether the asset had market value. If it did not a claim could be made.
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