Which comes first?

Interaction of enterprise investment scheme relief and taper relief

In 2005/06 the taxpayer sold some properties. Two had been used for business and non-business purposes others had been used for business only or non-business only. The taxpayer claimed enterprise investment scheme (EIS) relief and asked that it be divided between the gains on the non-business properties and the non-business parts of the mixed-use assets. He wished to apply EIS relief against the full amounts of the non-business gains on the two mixed-use properties and apply taper relief to the remaining business gains after the balance of the EIS relief was used.

HMRC said EIS relief could be used only against the whole gain of a single asset and could not be apportioned in the way the taxpayer proposed.

The First-tier Tribunal found in favour of the taxpayer but the Upper Tribunal allowed HMRC’s appeal. The...