Lack of corrective action after receipt of follower notice

The taxpayer appealed against a closure notice and penalty assessment for failure to take corrective action after receipt of a follower notice in respect of losses claimed in the tax year ended 5 April 1999 relating to deeply discounted securities. These arose as a result of arrangements involving the subscription for loan notes in companies controlled by the taxpayer which were then gifted to settlements which he had established.

Applying Ramsay the First-tier Tribunal concluded that taking a realistic view no loss was generated and there was no acquisition by the taxpayer due to the single composite nature of the transactions. This part of the decision is of historic interest only as the relevant legislation has long since been amended.

On the penalty appeal the tribunal concluded there was a ‘relevant judicial ruling’ – R Audley (TC1084). Given the relevance of the principles and...