Partnership purchase

HMRC began an investigation in 2009 into the taxpayer’s affairs after discovering he had bought a flat carried out refurbishment and then sold the property in 2003.

The Revenue sent the taxpayer a 2003/04 tax return which he completed declaring rent but no capital gain.

The tax department opened an enquiry; the taxpayer’s accountant later submitted a capital gains computation in respect of the sale of the flat.

The taxpayer subsequently told HMRC that he had bought the flat in partnership with another person meaning he was liable to tax on only a proportion of the gain.

The Revenue did not accept the contentions of the taxpayer who appealed.

The First-tier Tribunal noted there were inconsistencies in the taxpayer’s evidence – but the judge found it “more probably than not” that another person was involved in the purchase mainly because it seemed unlikely the...