In Gordon Lim v HMRC [2019] TC07158 the FTT held no deduction could be claimed for forfeited property deposits and payments for breach of contract; the taxpayer had not incurred the costs as part of his property dealing trade.

Revenue expenditure in a trader's accounts is disallowed for tax if it is not "wholly and exclusively"  incurred for the purpose of the business.

Mr Lim’s son and daughter in law had contracted to purchase two residential building plots and paid 10% deposits.

The FTT dismissed the appeal.

Links to our guides:

Wholly and exclusively…toolkit
Losses, trade losses and sideways relief
Penalties: Errors in Returns and Documents
Profits from dealing in or developing UK land

External Link:

Gordon Lim v HMRC [2019] TC07158