In Mr Steven Flashman v HMRC [2019] TC7419, the First Tier Tribunal found that a loss on a Loan to a trader was not allowable. There was no evidence that a loan ever existed.

If a UK resident individual or company makes a loan to another taxpayer and it becomes irrecoverable, Capital Loss Relief may be claimed under s253 TCGA 1992 (Relief for loans to traders).

  • The loaned funds must be used wholly for the purposes of a trade or to start a trade.

Mr Flashman paid £130,000 to Emerging Market Investments Ltd (EMI), a company undertaking trading on mobile usage routes involving fixed line termination costs on mobile networks via a telephone carrier, telco.

  • The marketing material for the company mentioned investment in several places but did not mention loans.
  • Mr Flashman said he had not received any contractual documentation and did not receive any asset in return for his money. His payment appeared to have been made via a sister company, EMI Wealth Ltd, which described itself as a marketing consultancy.
  • There was no evidence that either company had ever traded.
  • EMI got into financial difficulties; it repaid £30,000, the remaining £100,000 was irrecoverable.
  • Mr Flashman claimed relief under s253. HMRC denied the relief on the basis there was no asset for a capital loss to attach to. Only cash was paid and lost, and cash is an excluded asset for CGT purposes. There had been no loan for the purpose of a trade.

The FTT dismissed the appeal.

  • There was no evidence that Mr Flashman had made a loan, or that either company had borrowed funds from him, therefore there was no qualifying loan and could be no allowable loss.
  • The judge did not feel the need to comment on HMRC’s assertion that there was no chargeable asset other than to say that even if there had been the loan was not qualifying. He also did not need to consider the level of trading activity or lack thereof, of the companies.


This is yet another case where lack of evidence featured heavily. There could have been a detailed debate about what constitutes trading activity in these circumstances, or about chargeable assets, but this was not necessary to decide the case as it fell on first principles. There was no evidence that a loan even existed.

Links to our subscriber guides:

CGT relief: loans to traders

How to appeal an HMRC decision

External link:

Mr Steven Flashman v HMRC [2019] TC7419