Timothy Bunting v The Commissioners for HMRC
Decision date: 27 March 2024
Neutral citation: [2024] UKFTT 275 (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 whether Mr Bunting could claim a capital loss under s.253 TCGA 1992 in respect of a £2.2m loan that had been capitalised into 2,200,000 £1 shares which were effectively worthless when issued. The Tribunal held that "outstanding" and "irrecoverable" in s.253(3) mean unpaid and impossible (or not expected) to be recovered, and that subsistence or enforceability of the loan at the claim date is not required. Because the loan was satisfied by nil-value shares, the unpaid balance remained outstanding and irrecoverable for s.253 purposes, so the capital loss claim succeeds. The appeal was allowed.
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: high
The ratio is that for s.253(3) an unpaid debt does not need to remain legally subsisting or enforceable at the time of the claim; it is sufficient that the debt is unpaid and irrecoverable (i.e. impossible or not expected to be recovered). Satisfaction of a debt by the issue of essentially worthless property does not constitute payment for s.253 purposes, so the unpaid amount remains available for a capital loss claim.
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 noted (obiter) that subsection (4) (claims by guarantors) and the statutory treatment of debt satisfaction in s.251 (capping consideration at market value) support the view that "at that time" does not import an enforceability requirement and that worthless consideration leaves the indebted amount outstanding.