In HMRC v Execs of Mr Jeffrey Leadley [2017] UKUT 0111 the Upper Tribunal (UT) overturned the original decision of the First-Tier Tribunal (FTT) and found that Executors were not entitled to make a negligible value claim.

The taxpayer had invested £50,000 in shares of two companies and made a loan of £334,784 to another company. These became worthless.

The taxpayer died and his Executors made a negligible value claim against the shares and claimed a loss under the loan to trader rules.

The FTT decided that the executors could make these claims as the personal representatives were one and the same as the deceased.

HMRC appealed. The Executors withdrew from the proceedings on the basis that the tax was disproportionately small in comparison to potential costs of taking the case through the courts, leaving HMRC to present their case.

The UT decided that a deceased person and his personal representatives are not one and the same, as evidenced by the Capital Gains Tax Act which treats the personal representatives as acquiring the assets from the deceased person on death. Only the deceased could have made the claim and it could not be made by the Executors if the asset was already of a negligible value at the time of death.

The same analysis was applied to the loan to traders relief.

The UT allowed HMRC’s appeal and disallowed the loss relief claims.


Our guides:

Negligible value claims

Loss relief (income tax) disposal of shares

Cap on unrestricted tax reliefs – signpost

CGT relief: loans to traders

Can executors make negligible value claims?

Case reference:

UT decision: HMRC v Execs of Mr Jeffrey Leadley [2017] UKUT 0111

FTT decision: Exec of Mr Jeffrey Leadley v HMRC TC04007

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