No sale

Whether a forfeited deposit constituted an allowable loss

The taxpayer exchanged contracts to buy two properties from a developer. He planned to sell two other properties to raise the cash to buy them but the sales did not take place in time. As a result he did not have the funds to complete on the new properties. The developer therefore rescinded both contracts and as was its entitlement retained the deposit paid by the taxpayer.

The taxpayer claimed the loss of his deposit against the gains on the disposals of the two properties he sold.

HMRC refused the claim and the First-tier Tribunal dismissed the taxpayer’s appeal.

As a result of the First-tier Tribunal not granting him permission to appeal the taxpayer changed his grounds. He argued that when he had entered the contract with the developer he had acquired contractual rights that constituted...