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Conegate: interpretations of the value shifting rule

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There are certain longstanding questions as to how the value shifting rule in TCGA 1992 s 29 functions. The case of Conegate Ltd provided a great opportunity for the FTT to answer some of these questions, which was sadly neglected. The issue is whether the complicated manner in which Mr Sullivan acquired and financed his interest in football team West Ham gave rise to an allowable loss for chargeable gains purposes of £2m. HMRC refused his claim on the basis of TCGA 1992 s 17, the market value rule. However, it also asserted that no loss arose as a result of the value shifting in s 29; and that if a loss did arise, it would not be allowable as a result of the targeted anti-avoidance rule in s 16A. This leaves the question of why the FTT failed to raise the matter of ‘reorganisation’, even in passing.

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