Abigail Tan v The Commissioners for HMRC
Decision date: 20 March 2024
Neutral citation: [2024] UKFTT 238 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned Ms Tan’s negligible value claim under TCGA s.24 for 150,000 ordinary shares in Kleos (Holdings) Ltd which the Tribunal found were of negligible value on their allotment on 30 September 2017. The Tribunal held the monies recorded as provided by Ms Tan were loans, not subscription for equity, and because the shares were already negligible at acquisition Condition A of s.24(1B) was not satisfied the negligible value claim failed. The Tribunal also refused a very late alternative claim under s.253 TCGA and dismissed the appeal, upholding HMRC’s closure notices.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
Where an asset is already of negligible value on the date it is acquired, it has not “become” of negligible value while owned and so does not satisfy Condition A of s.24(1B) TCGA; contemporaneous company records (accounts and allotment documentation) are strong evidence in distinguishing loans from equity for tax purposes.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
A s.253 TCGA claim premised on loans to a trader is fact-sensitive and requires evidence as to outstanding principal and whether the loan has “become irrecoverable”; late amendments seeking to introduce such alternative grounds are likely to be refused when they would require further evidence and an adjournment.