Jonathan Mark Slade & Anor v The Commissioners for HMRC
Decision date: 26 July 2022
Neutral citation: [2022] UKFTT 227 (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 case concerned whether sums paid by two vendors under a High Court consent order (damages and costs) were deductible from the proceeds of sale when calculating CGT on the 2015 disposal of the Southern Parcel. The tribunal held the payments were not deductible under s.38(1)(b) TCGA 1992 because they were not incurred wholly and exclusively in preserving or defending title to the asset disposed of. The discovery assessments issued by HMRC were found to be formally valid and were upheld; the appeals were dismissed.
Ratio decidendi
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AI confidence in this ratio decidendi summary: high
Expenditure is deductible under s.38(1)(b) only if it is wholly and exclusively incurred in establishing, preserving or defending title to, or a right over, the asset disposed of. Where payments relate also to defending entitlement to sale proceeds or to title in other land, they are not deductible under s.38(1)(b); there is no basis in the statute for apportioning a sum that was not wholly and exclusively incurred for the required purpose.
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
The tribunal expressed doubt (and declined to decide) whether expenditure incurred after disposal can generally qualify under s.38(1)(b), noting the point lacked full argument. The tribunal also observed that the tax treatment of damages in the hands of recipients is irrelevant to the vendor’s CGT computation and does not determine deductibility for the vendor.