Expenditure was not deductible

The first taxpayer (JMS) was the son of the second taxpayer (JJS). A dispute arose in relation to a disposal of land between JJS and JMS and various other family members. The land had formed part of the estate of JJS’s mother. The dispute led to proceedings in the High Court and a consent order.

The issue before the First-tier Tribunal however concerned the amount that could be deducted in calculating the chargeable gains on the disposal of the land. In particular whether the taxpayers were entitled to deduct the payments which they made to the other family members pursuant to the consent order and the costs of the High Court proceedings. In essence they said they made no gain when they disposed of the land. Virtually all the proceeds were paid to the other family members by way of damages and costs. Therefore it was...