Careless or deliberate?

Incorrect claim included on tax return

In his 2009-10 self-assessment return the taxpayer made negligible value claims relating to the shares in two companies (TCGA 1992 s 24).

The shares initially qualified for enterprise investment scheme relief but that claim was withdrawn and share loss relief claimed under ITA 2007 s 131 to s 132. Both companies had gone into liquidation.

After an enquiry HMRC imposed a penalty on the basis that the return was inaccurate categorising that behaviour as deliberate (FA 2007 Sch 24). The taxpayer appealed.

The First-tier Tribunal said it was necessary as a pre-condition for a share loss relief claim under ITA 2007 s 131(1) for the taxpayer to have crystallised an allowable loss by a deemed disposal since there was no actual disposal of the shares. In this case the only way to do this...