Friday, 24 October 2014

UK: Share loss relief and the meaning of "issue"

The First-tier Tribunal (Tax) gave judgment a few days ago in Thomas v Revenue & Customs [2014] UKFTT 980 (TC). It was required to consider, amongst other things, whether shares had been "issued" in the context of a claim for share loss relief under the Income Tax Act 2007. Section 131 of the 2007 Act sets out the conditions and one of these is that the shares have been subscribed for by the individual. Section 135(2) states that an individual subscribes for shares in a company if they are "issued to the individual by the company in consideration of money or money's worth".

The Tribunal held that in the current context of "... very prescriptive statutory provisions ... it seems to us that if parliament had intended the word 'issue' for the purposes of share loss relief to mean something other than its normal company law meaning, it would have done so by means of an explicit definition" (para. [167]). The Tribunal therefore held, with reference to National Westminster Bank plc v Inland Revenue Commissioners [1995] 1 AC 119, that shares were only issued when the entire process of application, allotment and registration had been completed.

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