Loan notes were not registered in Jersey at the time of their redemption, such that a capital gains tax liability arose for the appellants, but penalties imposed for negligently incorrect tax returns were set aside. 

The first appellants (the personal representatives of an individual (MS) who died in 2023) and second appellant (PS) appealed against capital gains tax (CGT) liabilities which HM Revenue and Customs considered arose from disposals made by MS and PS of certain loan notes in the tax year 2006/07, along with related penalties, calculated at 25% of the tax said to have been underdeclared.  

The appellants had disposed of shares in a company (VHL) in 2006/07, in return for cash and loan notes. A structure was adopted for the transaction involving