The taxpayer sought capital gains tax relief of a loan to a business.
Held: To succeed in his claim the taxpayer had to establish that the indebtedness created was to be used entirely to serve the borrower’s business.
Judges:
The Honourable Mr Justice Patten
Citations:
[2004] EWHC 1596 (Ch), Times 22-Jul-2004
Links:
Statutes:
Taxation of Chargeable Gains Act 1992 253(1)
Jurisdiction:
England and Wales
Citing:
Cited – Strong and Co of Romsey Ltd v Woodifield HL 30-Jul-1906
The company sought to deduct from its trading profits a sum expended paying damages for personal injuries to a visitor to the taxpayer’s Inn. The claim had been rejected.
Held: The company’s appeal failed. Lord Davey said: ‘I think that the . .
Cited – Morgan v Tate and Lyle Ltd HL 1955
The words ‘for the purposes of the trade’ in the statute mean ‘for the purposes of enabling a person to carry on and earn profits in the trade’. Money spent for the purpose of preserving the trade from destruction can properly be treated as wholly . .
Cited – Vodafone Cellular Ltd v G Shaw (Her Majesty’s Inspector of Taxes) CA 20-Mar-1997
The court considered the application of the ‘exclusively’ test for expenditure which was sought to be set off against tax. Examining the leading modern cases, Millett LJ said: ‘the following propositions may be derived. (1) The words for the . .
Cited – MacKinlay (Inspector of Taxes) v Arthur Young McClelland Moores and Co HL 23-Nov-1989
Expenditure does not qualify for deduction if the object of the expenditure was to serve another private purpose in addition to the business purpose for which it was purportedly incurred.
HL Income Tax – . .
Cited – Mallalieu v Drummond HL 27-Jul-1983
The taxpayer was a barrister. To comply with Bar guidance on court dress, she wore, in court and in and to and from chambers black dresses, suits and shoes and white blouses. The clothing were perfectly ordinary articles suitable for everyday wear. . .
Cited – Bentleys, Stokes and Lowless v Beeson (HMIT) CA 1952
The court considered whether the partners in a firm of solicitors could deduct from profits the expenses involved in entertaining clients to lunch.
Held: They were deductible, notwithstanding the element of hospitality involved: ‘The relevant . .
Cited by:
Appeal from – Robson v Mitchell (HM Inspector of Taxes) CA 18-May-2005
The company had taken out a loan to finance works on the farm. The loan was guaranted by the taxpayer. Years later when the farm was sold, part of the money was used to repay the loan, and the taxpayer sought to set it off against his liability for . .
Lists of cited by and citing cases may be incomplete.
Capital Gains Tax
Updated: 01 October 2022; Ref: scu.198597
