Summary
A penalty for a careless tax return error (under FA 2007, Sch 24) in claiming a capital loss was reduced, as there was no reasonable prospect of the appellant using most of the capital loss to reduce a future tax liability.
Background
The appellant was the sole director shareholder of a company (K Ltd). In 2003, the appellant loaned £9,968,753 to K Ltd. In December 2004, the appellant was issued with shares in conversion of his loan to the company.
In February 2011, the appellant submitted his tax return for 2009/10. The return contained a claim for capital loss relief (under TCGA 1992, s 253) in the sum of £10,736,038, which was said to arise upon the appellant’s loan to K Ltd having become irrecoverable in December 2009. Part of the loss (£202,071) was set against chargeable gains accruing to the appellant in 2009/10; the balance of
