In Jonathan Mark Slade & Jonathan James Slade v HMRC [2022] TC08548, the First Tier Tribunal (FTT) found the legal expenditure incurred defending rights to a number of assets collectively was not an allowable deduction for CGT purposes when one of those assets was sold alone.

  • Jonathan Mark Slade and Jonathan James Slade (Appellants) sold a parcel of land (Southern Parcel) they held in joint names which had been inherited. They inherited a second parcel of land (Northern Parcel) at the same time.
  • A dispute arose in relation to the split of the proceeds of the sale of the Southern Parcel between the Appellants and other members of the family.
  • This dispute was due to allegations that the estate had been managed in breach of fiduciary duties in respect of both the Southern and Northern Parcels.
  • The dispute was solved by the High Court by way of a consent order which lead to costs and payments to be made to other members of the family totalling some £275,000.
  • The Appellants claimed a CGT Deduction in their computations for the payments which were made to other members of the family as well as associated legal costs.
  • HMRC raised closure notices denying the deductions on the basis that they were not wholly and exclusively incurred.
  • The taxpayers Appealed to the FTT.

The FTT found that:

  • The expenditure was not incurred wholly and exclusively on the Southern Parcel by the Appellants, or on their behalf, as:
    • The expenditure was incurred in respect of both the Southern and Northern Parcels, not solely the Southern Parcel.
  • The expenditure could not, therefore, be said to fall within the legislation which required it to be incurred wholly and exclusively for the establishing, preserving or defending their title to or rights over the asset disposed of which was only the Southern Parcel.
  • There were no legislative provisions which would enable the expenditure to be apportioned and a deduction claimed accordingly.

The appeal was dismissed.


This case highlights that legislation can, at times, be rigid and prevent a deduction which taxpayers may, based on grounds of fairness and economics, assume that they will get.

The taxpayer, in this case, was unrepresented, which may have had a bearing on the outcome. It will be interesting to see if there will be an appeal. 

Useful guides on this topic

CGT: Deductible expenditure
What expenditure is allowable for Capital Gains Tax (CGT)? What about loan interest, early redemption fees etc?

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Jonathan Mark Slade & Jonathan James Slade v HMRC [2022] TC08548

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