In John and Janet Beesley v HMRC [2023] TC08871, the First Tier Tribunal (FTT) found that a tax agent had mistakenly claimed a deduction for Capital Gains Tax (CGT) in respect of payments made to redeem a mortgage and made under a personal guaranteed on the disposal of a property and that no Entrepreneurs’ Relief was due either.

  • Mr and Mrs Beesley disposed of a jointly held property in October 2015 but failed to Report it on their 2015-16 tax returns.
    • It was asserted by their agent that the disposal was for the sole purpose of satisfying a personal guarantee to a bank.
  • In May 2018, HMRC wrote Mr and Mrs Beesley requesting further information as it was believed that a property disposal had not been declared.
  • Following some correspondence, HMRC requested a Capital Gains Tax (CGT) computation. This was provided by Mr and Mrs Beesley’s tax agent in October 2018.
  • The agent’s computation showed a sale price of £395,037 and deductions for a 'Redeem Mortgage' figure of £186,345 and a Personal Guarantee' of £152,016, plus legal fees and an estate agent’s commission.
    • Each taxpayer’s gain was stated to be £17,780. A 10% rate of CGT was applied.
  • HMRC advised that they did not consider either the mortgage redemption or the personal guarantee figures to be Deductible for CGT purposes.
    • It was suggested by HMRC that a claim for Loan to traders relief might have been what was intended in respect of the guarantee payment.
  • HMRC produced an amended CGT computation showing a gain of £134,945 for each taxpayer.
    • Assessments were raised on this basis, and penalties were charged on the grounds of Deliberate inaccuracy.
  • After protracted correspondence between the agent and HMRC, in which HMRC explained the position multiple times, the taxpayers Appealed to the First Tier Tribunal (FTT).

The FTT found that:

  • A payment for the redemption of a mortgage is not a CGT deduction allowed by statute. No deduction was, therefore, due for the £186,345 paid by Mr and Mrs Beesley.
  • No evidence was produced to establish whether there was a qualifying loan for the purposes of relief for loans to traders.
    • There was some suggestion that the original loan funds were paid into the family business, but there was no evidence as to who the business account belonged, or whether the money was indeed used for the purposes of a trade.
    • In any case, the payment made under the personal guarantee was not made until 2016-17. This was after the tax year of the property’s disposal and there was no mechanism for any capital loss to be carried back to 2015-16.
  • There was no evidence to support the agent’s claim for Entrepreneurs’ Relief (now Business Asset Disposal Relief).
  • The computations and assessments made by HMRC were correctly calculated and validly issued.
  • The taxpayers did not cooperate with HMRC. They declined to reply to the letters asking what advice they acted upon and failed to give any information regarding penalties.

The appeal was dismissed.


Allowable deductions for CGT purposes are laid down by section 38 of the Taxation of Chargeable Gains Act 1992.

As stated by the tribunal, The key issue here is that it is apparent that the Agent has never understood the basic principles of CGT”.

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?

CGT: Loans to traders relief
What is loans to traders relief? When can it be claimed? What are the conditions of the relief?

CGT: Reporting when & how?
How do you report your capital gains? What return do you use? There are different ways for individuals to report capital gains depending on whether you are resident or non-resident, and whether you are in or out of Self Assessment. 

Residential Property gains
The definition of 'Residential Property' is important for Capital Gains Tax (CGT) purposes when considering how a gain is reported, when tax is paid and the rates of tax that apply. What is a Residential Property gain? 

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John and Janet Beesley v HMRC [2023] TC08871

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