A Certificate of Deposit not a chargeable asset for CGT negligible value claims. In Weston v HMRC [2014] UKFTT TC03152, the FTT has held that a non-negotiable Certificate of Deposit (CD) was not a “chargeable asset” for capital gains tax (CGT) purposes.

Mr Weston had claimed relief for capital losses on the basis of a negligible value claim under section 24, TCGA 1992. He claimed that, as a result of the now infamous Stanford ponzi fraud, a CD, which he had invested in for £1 million issued by a company (SIB), had become of negligible value. W also claimed that he was entitled to loss relief because he held an asset not constituted by the CD itself, but by a right of action against SIB in relation to the non-performance (or impaired performance) by SIB of its obligations under the CD.

HMRC disallowed the claim.

The FTT found that the CD was not a “debt on a security” nor was it a chargeable asset. It then considered whether a right of action was an asset.

In the case of Zim Properties Ltd v Proctor 58 TC 371 a right to bring an action to seek to enforce a claim that was not frivolous or vexatious, and which could be turned to account yielding a substantial capital sum, was also an “asset” for CGT purposes. The FTT noted that, in Zim Properties, Warner J had pointed out that not every right to a payment is an “asset” for CGT purposes. For example, in the case of the right of a seller of property to the payment of its price, the relevant asset is the property itself. Therefore, although W had a right of action against SIB, that right is not a separate “asset” for CGT purposes, because it is merely one of the rights which he holds by virtue of holding the CD itself.

W did not have a chargeable asset, so the issue of negligible value did not arise. The tribunal said that had it been required to do so, it would have agreed with the claimant that it had become effectively worthless.


Weston v HMRC [2014] UKFTT TC03152 

What to do with an asset of negligible value?

See Loss relief (income tax) disposal of shares and Limit (cap) on income tax reliefs