High Court would have allowed rectification

In February 2019 the taxpayer disposed of his entire shareholding in ISG Holdings Ltd to a third party. He realised a gain of about £600 000 on which he claimed entrepreneurs’ relief.

HMRC refused the claim on the ground that he did not hold 5% of the ordinary share capital in ISG for one year before the disposal. Instead he held 4.99998%.

The taxpayer said he should be entitled to the relief on the basis that if proceedings were brought in the High Court it would order the rectification of specific documents so as to secure that during the year of disposal he held 5% of the ordinary share capital. Further the First-tier Tribunal had jurisdiction to proceed as if such rectification had taken place (Upper Tribunal decision in Lobler v CRC [2015] STC 1893).

On its jurisdiction the First-tier Tribunal quoting Proudman J in the...