Hunt v Revenue & Customs (Capital gains tax - Payment under a guarantee in respect of loan to company) [2019] UKFTT 515 (TC) (06 August 2019)

Hunt v Revenue & Customs (Capital gains tax - Payment under a guarantee in respect of loan to company) [2019] UKFTT 515 (TC) (06 August 2019)

Altala's activities, including entering into binding contracts with third parties, incurring significant expenditure, and undertaking operational steps directly related to the intended supply of lottery management services, constituted the commencement of trade for tax purposes, even though the lottery did not...

Source-derived case information.

Citation
[2019] UKFTT 515
Parties
Appellant: Michael John Hunt; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
06 August 2019
Procedural Posture
Tax Appeal / First Tier Tribunal (tax) Substantive Decision
Outcome
Appeal allowed
Legal Topics
Capital Gains Tax, Allowable Losses, Qualifying Loan, Commencement of Trade, Personal Guarantee, Self Assessment
Tax Law Capital Gains Tax Allowable Losses Qualifying Loan Commencement of Trade Personal Guarantee Self Assessment

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Parties

Michael John Hunt

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax) Substantive Decision

Legal Issues

  1. 1 Whether payment under a guarantee in respect of a loan to a company is an allowable loss for capital gains tax purposes under s 253(4) TCGA 1992
  2. 2 Whether the loan was a 'qualifying loan' under s 253(1) TCGA 1992
  3. 3 Whether the company (Altala) commenced trading for the purposes of the relief

Ratio Decidendi

Altala's activities, including entering into binding contracts with third parties, incurring significant expenditure, and undertaking operational steps directly related to the intended supply of lottery management services, constituted the commencement of trade for tax purposes, even though the lottery did not launch and the necessary licence was not ultimately obtained. The payment under the guarantee was therefore an allowable loss under s 253(4) TCGA 1992.

Court Disposition

Appeal allowed

Orders

  • HMRC's amendment to the 2009-10 self-assessment tax return is set aside
  • Mr Hunt's claim for relief under s 253(4) TCGA 1992 is allowed