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R and J Dyer v CRC, Upper Tribunal (Tax and Chancery Chamber), 2 September 2016
Were shares of negligible value at acquisition?
In 2007 the taxpayers acquired shares in their daughter’s fashion business. The shares represented the capitalisation of part of a loan made by the taxpayers to the company. In 2008 the daughter went to the US and the company ceased trading. It was wound up in 2009 and the taxpayers claimed their shares had become of negligible value under TCGA 1992 s 24.
HMRC accepted the shares were of negligible value in 2009 but said they were already so when the taxpayers acquired them two years earlier.
The First-tier Tribunal agreed with HMRC; the taxpayers appealed to the Upper Tribunal.
Judge Colin Bishopp was satisfied that the First-tier Tribunal was correct to find that there was no formal contact between the daughter and the company. There was no evidence of a remuneration agreement or identification of her duties.
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