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R, A and M Gardiner (TC3550)
The three taxpayers entered into a marketed avoidance scheme in 2005 with the aim of mitigating capital gains tax (CGT) on the sale of shares.
The arrangement involved generating capital losses from the acquisition and disposal of capital redemption policies.
The taxpayers disclosed the scheme in their tax returns for the year to 5 April 2006. HMRC began an enquiry into the documents.
The Revenue had successfully challenged the same scheme in J Drummond. The taxpayers paid the CGT due having accepted the arrangement was ineffective but they appealed against tax authority’s contention that they had negligently submitted incorrect returns.
The First-tier Tribunal said HMRC’s statement of case was “clearly deficient” and “failed to particularise the negligence being alleged”.
The department accepted the criticisms and agreed the taxpayers were “somewhat in the dark about the case against them”. The tribunal added it was for the Revenue to establish...
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