Beyond the limit

The taxpayer and his business associate bought a property comprising a shop and offices. The shop was let to a bookmaker in November 2004 on a 15-year term and the offices were let to a limited company in August 2006 on a five-year lease.

The taxpayer sold the building in July 2007 with the tenants in occupation. He used his 2007/08 tax return to claim business asset taper relief on his share of the sale.

HMRC enquired into the claim and then refused it on the ground the tenants were 51% subsidiaries of listed companies. The department cited TCGA 1992 sch A1 under which buildings with listed companies as tenants did not qualify for business asset taper relief.

The taxpayer appealed saying the tenants were not 51% subsidiaries of trading companies according to the definition in TCGA 1992 s 170. He added that...