The taxpayer claimed a capital loss of £200 000 in his 2015-16 tax return in respect of a loan made to a Sierra Leone trading company.
HMRC opened an enquiry and his accountants explained that the loan had been converted into shares in a British Virgin Islands company in July 2009. The enclosed shareholder agreement identified the name of the company the class of shares and the number of shares held by the taxpayer.
HMRC asked whether the taxpayer wished to make a negligible value claim and requested further information. The accountants provided this and confirmed that the taxpayer wanted to make a negligible value claim. They also stated that the taxpayer was withdrawing his losses claim.
A few months later HMRC wrote to the accountants stating that in the absence of a valid negligible value claim it would remove the losses from the capital gains tax...
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