Payments under contracts for land and properties to be built in circumstances where the properties were not subsequently built gave rise to an allowable loss for capital gains tax purposes due to the effective disposal of the contractual rights. 

Background 

In August 2007, the appellants (ALW and MLW) entered into contracts (the ‘2007 contracts’) with the vendors to purchase two plots of land in Barbados together with villas which, at the time the contracts were made, were still to be constructed on the plots. The effect of the 2007 contracts was, accordingly, to provide that the vendors were to build the villas so that, on completion of the 2007 contracts, ALW and MLW would acquire plots of land with complete villas on them. The scheduled completion date under the 2007 contracts was by 30 June 2009.