Business investment relief rules breached

The taxpayer was resident but not domiciled in the UK and was taxable on the remittance basis. In 2016 he remitted £1.5m of his foreign income to the UK. He invested it in a UK company in which he was the sole shareholder and director.

The taxpayer claimed business investment relief (ITA 2007 s 809VA) on the investment so that the £1.5m was treated as not remitted to the UK. The company gave him a director's loan account – which he used drawing against it to pay personal expenses. The balance eventually stood at about £71 000. At all times the taxpayer had adequate personal funds to pay the loan account or to meet the personal expenses himself but he did not. After an enquiry HMRC withdrew the business investment relief on the basis that there was an extraction of value from the...