Timothy Bunting v The Commissioners for HMRC

Timothy Bunting v The Commissioners for HMRC

A claim for capital loss relief under section 253 TCGA 1992 can be made where a qualifying loan has been capitalised for shares of nil value, as the amount remains outstanding and irrecoverable. The statutory language does not require the loan to subsist or be enforceable at the time of claim, provided the debt is unpaid and irrecoverable. Satisfaction by worthless shares does not constitute payment or valuable consideration.

Parties
Appellant: Timothy Bunting; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
11 October 2024
Procedural Posture
Tax Appeal / First Tier Tribunal Judgment
Outcome
Appeal allowed
Legal Topics
Capital Gains Tax, Loss Relief, Interpretation of Section 253 TCGA 1992, Loan Capitalisation
Tax Law Capital Gains Tax Loss Relief Interpretation of Section 253 TCGA 1992 Loan Capitalisation

Case Brief

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Parties

Timothy Bunting

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Judgment

Legal Issues

  1. 1 Whether a claim for capital loss relief under section 253 TCGA 1992 can be made after a loan is capitalised for shares of nil value
  2. 2 Whether the statutory language 'at that time' in section 253(3) requires the loan to subsist at the time of claim
  3. 3 Whether satisfaction of a loan by issue of worthless shares constitutes payment or leaves an outstanding irrecoverable amount

Ratio Decidendi

A claim for capital loss relief under section 253 TCGA 1992 can be made where a qualifying loan has been capitalised for shares of nil value, as the amount remains outstanding and irrecoverable. The statutory language does not require the loan to subsist or be enforceable at the time of claim, provided the debt is unpaid and irrecoverable. Satisfaction by worthless shares does not constitute payment or valuable consideration.

Court Disposition

Appeal allowed

Orders

  • HMRC's closure notice refusing the claim for capital loss relief under section 253 TCGA 1992 is set aside.
  • The Appellant is entitled to claim capital loss relief for the relevant amount.