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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Barnett v Revenue & Customs [2010] UKFTT 39 (TC) (21 January 2010)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2010/TC00353.html
Cite as: [2010] UKFTT 39 (TC)
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Howard Barnett v Revenue & Customs [2010] UKFTT 39 (TC) (21 January 2010)
CAPITAL GAINS TAX/TAXATION OF CHARGEABLE GAINS
Other
[2010] UKFTT 39 (TC)
TC00353
Appeal number TC/2009/10220
CAPITAL GAINS TAX – Adjustment to self-assessment producing an increased chargeable gain for the year 2005/06 by reference to an agreed downwards adjustment in the acquisition cost of a property disposed of – whether an allowable loss on a disposal of shares not yet made could bet set off against the chargeable gain to reduce the additional tax payable to nil – held, no – the Tribunal had no jurisdiction to adjudicate on allegations that the Appellant had been treated unreasonably or unfairly by the Respondents
FIRST-TIER TRIBUNAL
TAX CHAMBER
HOWARD BARNETT
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS (Capital Gains Tax) Respondents
TRIBUNAL: JOHN WALTERS QC
GILL HUNTER
Sitting in public in London on 13 January 2010
The Appellant in person
Kim Sukul, HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2010
DECISION
1. Mr. Barnett (the Appellant) appeals against an amendment to his self-assessment for the year of assessment 2005/06.
2. The amendment resulted in an increase in tax due of £3,688.40. The Tribunal was told that £1,203.60 of that amount was now agreed to be due and the dispute now related to the balance of £2,484.80.
3. This increase in tax due arose in the following circumstances.
4. The Appellant, with his brother and his sister owned a maisonette in Stanmore, in which their mother lived. She had gifted it to them in February 1998.
5. In 2001, on the advice of his accountant, the Appellant (or his brother) obtained a professional valuation of the maisonette as at the date in February 1998 on which they acquired it. That valuation showed a value of £150,000. They had obtained a valuation against the day when they would or might need to calculate a chargeable gain on the disposal of the maisonette.
6. They sold the maisonette on 8 July 2005 for £249,000. In his tax return and self-assessment for the year of assessment 2005/06, the Appellant returned a chargeable gain realised by him on the sale, computing it by reference to an acquisition value of £50,000 (one third of £150,000).
7. The Respondents opened an enquiry into his return on 10 September 2007. In the course of that enquiry the acquisition value of the maisonette was investigated. The Respondents took the view that it was lower than the amount of £150,000 certified in the valuation obtained by the Appellant and his brother and sister. In the end, this valuation issue, so far as it related to his own return, was resolved by an agreement reached by the Appellant with Officer Single of the District Value Services of the Valuation Office Agency on 19 September 2008. The parties agreed that the correct acquisition value of the maisonette was £123,750, one third of which was £41,250 – which was the relevant figure for the purposes of the Appellant’s capital gains tax self-assessment.
8. On this basis, the amount of the chargeable gain accruing to the Appellant in the year of assessment 2005/06 on the disposal of the maisonette is agreed. The amount of additional capital gains tax accordingly payable is also agreed.
9. The Appellant has suggested to the Respondents that he could now dispose of shares in his ownership, which disposal, he says, would give rise to a loss. He would make such a disposal if the resultant loss could be set against the chargeable gain on the disposal of the maisonette. On this basis, he says, the additional capital gains tax payable would be reduced to zero.
10. The Respondents have replied that such a loss could not be set against a chargeable gain accruing in an earlier year (section 2(3) Taxation of Chargeable Gains Act 1992).
11. The Appellant’s complaint is that this is unfair and unreasonable and contrary to the Respondents’ assurances in public notices that they will act fairly and reasonably. He says, and the Tribunal accepts, that he has acted carefully at all stages in this matter, in reliance on a professional valuation obtained from a responsible valuer. If he had known of the additional liability at a time when he could have reduced it by making a timely loss-making disposal, he would have done so. He did not, however, know of the additional liability until several years after the disposal had been made.
12. At the conclusion of the hearing we dismissed the appeal, because it seemed to us that there is no basis on which we could properly allow an appeal against the amendment to the Appellant’s self assessment.
13. First, the amendment is agreed to be correct, because it is calculated on the basis of the agreed acquisition cost of £41,250.
14. Secondly, general complaints that the Respondents have treated an appellant unfairly or unreasonably are not themselves within the jurisdiction of this Tribunal. We would add that we have heard nothing which suggests to us that the Appellant has been treated unfairly or unreasonably in this case.
15. Thirdly, this Tribunal is unable to take into account a loss on a disposal of assets which has not been made. Any such loss is at this stage hypothetical.
16. The position might be different if the Appellant were to make, and the Respondents were to accept, an out of time claim that the shares in question were of negligible value in the year of assessment 2005/06, so that the Appellant could be treated as having made an allowable loss in that year, which was sufficient to reduce the chargeable gain on the disposal of the maisonette by the amount required.
17. However, in the circumstances prevailing and for the reasons given, the Tribunal must dismiss the appeal.
JOHN WALTERS QC
JUDGE OF THE FIRST-TIER TRIBUNAL
RELEASE DATE: 21 January 2010