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R Dyer and J Dyer (TC3073)
The taxpayers acquired shares in their daughter’s fashion business. The shares represented the capitalisation of part of the debt owed by the company to the taxpayers and their trusts.
The firm was wound up in 2009 and the taxpayers claimed their shares had become of negligible value under TCGA 1992 s 24.
HMRC accepted the shares were of negligible value in 2009 but added they were already of negligible value when the taxpayers acquired them two years earlier.
The taxpayers appealed.
The First-tier Tribunal found that the daughter had no formal contract of employment in the company with which her dealings were “marked by the utmost informality”.
She had never assigned or leased her intellectual property rights making the business effectively worthless. No potential buyer would invest unless there was a “firm contractual agreement” from the daughter to the company and it had “undisputed and...
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