Losing out on losses

Confusion on the self-assessment loss relief process

The taxpayer incurred a capital loss in 2011-12 on the liquidation of a trading company. Under ITA 2007 s 131 the taxpayer elected to set the loss against his income tax liability for 2010-11 and the balance against that for 2011-12. The result was that the former was reduced to nil. He claimed a tax repayment of £63 188 previously paid for that year. HMRC refused to make the repayment and the taxpayer made a claim in the High Court for an order for HMRC to make the repayment plus interest.

HMRC resisted on four grounds.

• The claim was not properly quantified.
• HMRC had validly opened an enquiry into the claim and thus had the power to refuse to give effect to the claim until the enquiry was concluded.
• The...