Jurisdiction(s):
United Kingdom

CGT timing of disposal - FTT rejects pre-3 December 2014 contract; preparatory steps insufficient, Entrepreneurs' Relief denied (Delaney v HMRC)

Published on: 18 March 2024

Published by a LexisNexis Tax expert

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Delaney v HMRC [2024] UKFTT 214 (TC)

The taxpayer submitted a claim for entrepreneurs’ relief in her tax return for the year ended 5 April 2016. The claim related to the transfer of her business—operating two nursery schools—to her close company (MDNSL). Until 3 December 2014, a person disposing of a business, including goodwill, to a connected limited company could claim entrepreneurs’ relief, reducing the capital gains tax rate from 28% to 10%. From 3 December 2014, by sections 169L and 169LA of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), that relief was withdrawn for such disposals. Under TCGA 1992, s 28, the timing of a disposal is the date on which the contract giving rise to it is made. The taxpayer maintained that a contract for the disposal existed before 3 December 2014. HMRC determined that, without a written agreement between the taxpayer and MDNSL, there was no valid contract in place before the actual disposal...

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