Shares of negligible value

Does the company in which shares were held satisfy the conditions for relief?

In 2007/08 the taxpayers acquired shares in CALA. These had become of negligible value at 6 April 2010. They claimed share loss relief against their income.

HMRC accepted that the taxpayers were entitled to claim a capital loss but not that they satisfied the conditions to set it against income under ITA 2007 s 131. To qualify they had to show that the shares were in a qualifying trading company as described in s 134.

The First-tier Tribunal said the company was a property developer. It built houses and sold them along with the land. So while the company traded its business of property development was excluded under s 192(1)(g) and s 196. The appeal failed on this basis.

However the tribunal added that because the company’s gross assets exceeded...