Forfeited deposit was not a capital loss

In July 2014 the taxpayer entered into a contract relating to a plot at a property in London. Under the contract the seller was required at completion to grant the taxpayer a lease of the premises. Completion was to take place after building work had been completed. The taxpayer was to pay a deposit on the date of the contract with a stage payment payable 12 months later and the balance on completion.

In the event the taxpayer paid the deposit but not the stage payment due problems raising funds. As a result the seller kept the deposit and reservation fee. The taxpayer claimed a capital loss in respect of his lost deposit. HMRC refused the claim.

The First-tier Tribunal considered itself bound by the Upper Tribunal’s decision in Hardy v CRC [2016] UKUT 332 (TCC) in which the facts were similar. It therefore concluded that...