A Kerrison v HMRC

Cathya Djanogly

In A Kerrison v HMRC [2019] UKUT 8 (22 January 2019) the UT found that a scheme to generate capital losses failed under the value shifting rules (TCGA 1992 s 30) but that a loan waiver was not subject to income tax (ITTOIA 2005 s 687 (1)).

Mr Kerrison had implemented a scheme known as Excalibur designed to generate capital losses. The scheme involved the following steps. Broadgate a new company was incorporated in the Isle of Man and it acquired a small UK retail trade. Mr Kerrison took a banking loan to subscribe for shares in Broadgate and entered into two agreements with Braye an unconnected company. Under the first agreement Mr Kerrison sold his shares in Broadgate to Braye; and under the second agreement he granted Braye a put option to sell the shares back to him at their ‘fair value’ plus...

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