Wrong kind of business

HMRC began an investigation into the capital gains tax treatment of the disposal of properties by the taxpayers for the year 2007/08.

The department believed that no business asset taper relief was due on the gain on the basis the couple’s property letting firm was not a qualifying activity under TCGA 1992 sch A1 para 5.

The taxpayers appealed saying the properties had been bought using profits generated from their car sales business and had been used to make a further profit; the buildings were business assets and business asset taper relief should apply.

The First-tier Tribunal noted that the properties had been bought with a view to holding them as long-term assets to be let out as private rented accommodation. One of taxpayers referred to the properties as being part of their future pension provision.

On this basis “it was quite clear” to the tribunal “that...