No strike-out

Construction of closure notice

The underlying dispute in this appeal related to the partnership’s claim for a loss of more than £7m. It was attributable to a net realisable value adjustment on two properties the partnership owned. After an enquiry HMRC issued a closure notice amending the loss to a profit of £672 285 reflecting the disallowance of the revaluation adjustment. For this to be allowed both parties accepted that the partnership must have been engaged in a trade at the relevant time and also that the properties must have been held as trading stock.

The closure notice had been confined to the trading issue rather than whether the properties were held as trading stock. In its skeleton argument before the Upper Tribunal HMRC switched to the stock issue arguing that the properties were investment assets.

As a result the taxpayer applied to...