Personal Tax: Capital gains tax: professional negligence
In Bradbury v Ernst & Young (CA – 12 March) an individual (B) sold a successful business in 1997 and received $150 000 000 in loan notes as consideration. On 2 April 1998 he subscribed the $150 000 000 for shares in a newly incorporated company (P). He claimed reinvestment relief (which was abolished for acquisitions made after 5 April 1998 by FA 1998 s 165 Sch 27).
However P was unable to reinvest the full amount of B's investment within the statutory time limit. Furthermore P reinvested much of the investment by buying controlling shareholdings in trading companies. Much of the value of these businesses lay in the goodwill they had built up before the acquisition by P. When the assets of the business were 'hived up' to P the base cost at which P was taken to...
