The rescission of a property purchase contract did not constitute the disposal of an asset as no asset was acquired upon entering into the contract, and a forfeited deposit on the rescinded contract was therefore not an allowable loss on disposal.
The appellant paid a 10% deposit on the prospective purchase of a property, which was paid on exchange of contracts with the vendor. However, funds were not subsequently available to complete the purchase. The vendor refused to wait until the necessary funds were raised to complete, and rescinded the contract and retained the deposit.
The appellant realised capital gains on other properties, and sought to offset the loss on the forfeited deposit against those gains. However, HM Revenue and Customs (HMRC) disallowed the loss relief claim for capital gains tax purposes in the appellant's tax return for 2009/10. The appellant appealed.
The First-tier Tribunal ) (
