Basis of conclusion

A partnership claimed loss relief as a result of a net realisable value adjustment for two properties.

The claim for the decline in value required two conditions to be met:

• the properties must have been trading stock as opposed to investment assets (the trading stock issue); and
• the partnership must have been trading in the year in which the claim was made (the commencement of trade issue).

HMRC refused the claim and issued a closure notice.

The notice was confined to the commencement of trade issue. The partnership said the First-tier Tribunal had jurisdiction to hear an appeal on this point only but HMRC had put their case on the basis of the trading stock issue. The issue was whether the case should be struck out.

The First-tier Tribunal said the High Court decision in Tower MCashback LLP1 v CRC [2008] STC 3366 and Fidex...