In 2014, HMRC's personal tax contentious issues panel conceded that in certain cases it will allow taxpayers' claims for Mansworth v Jelley loss relief. This will bring to an end many long-running disputes over share losses

This is a freeview 'At a glance' guide to capital loss relief on share options.


Following litigation, HMRC's advice in January 2003 was that Mansworth v Jelley capital losses were allowable. 

The law in relation to unapproved share options changed in April 2003, and so for disposals of shares acquired under option schemes after that date, there were no losses.

  • HMRC did not change its guidance on pre-April 2003 share option disposals until 2009.
  • The change in the guidance meant that there should never have been any losses.
  • HMRC then asked taxpayers to go back and amend any tax returns where losses had been claimed against capital gains.
  • Some taxpayers objected and the matter has been argued over for years and years.

The position for taxpayers with these types of losses is as follows:

1. If the loss has never been claimed against capital gains there is now no hope of making a claim going forward.
2. If the loss has been offset in an earlier tax return and HMRC did not open an enquiry within the set time limits required there is nothing HMRC can do to claw back relief. The return enquiry window is now closed. So these taxpayers have the benefit of the loss.
3. If a taxpayer has claimed a loss against capital gains before HMRC changed its guidance, but HMRC opened an enquiry into the tax return and so did not agree the loss, and has still not agreed the loss, following HMRC's new concession the taxpayer may now be able to make a claim on the basis that he had a legitimate expectation that HMRC's guidance at the time of making the return was correct.

Current position

Claims for loss relief are now being allowed if the taxpayer:

  • Can make a realistic case that they relied on incorrect guidance (in practice this is a 'balance of probabilities' test).
  • Would suffer detriment if those losses were denied by HMRC.
  • Would have had a legitimate expectation except that HMRC's delay in working the enquiry means that the level of evidence they are now able to provide is limited (again, in practice this is a 'balance of probabilities' test).


In The Queen on the application of Ralph Hely-Hutchinson v HMRC [2015] a taxpayer was successful in judicial review over HMRC's tax treatment of his Mansworth v Jelley loss claims, however, the decision of the FTT was overturned by the Court of Appeal in R (Hely-Hutchinson) v HMRC [2017] EWCA Civ 1075. The technical point regarding the availability of the losses claimed has been remitted back to the First Tier Tribunal to decide. Leave to appeal the decision of the Court of Appeal to the Supreme Court has been denied.

External link

HMRC's personal tax contentious issues panel guidance

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