An attempt to claim negligible value relief was rejected by the First Tier Tribunal (FTT). It was found that the shares were already of negligible value at the time of acquisition.

In Abigail Tan v HMRC [2024] TC09112, the First Tier Tribunal (FTT) rejected a claim for negligible value relief. It was determined that the shares were already of negligible value at the time of acquisition ande they did not meet the conditions necessary to make a valid claim.

  • The taxpayer owned ordinary shares in Kleos (Holdings) Limited (KJL) and provided loans to the company of £150,000.
  • A loan-to-equity swap took place; the taxpayer exchanged the loans for an additional 150,000 £1 shares in KJL.
  • The taxpayer submitted a Negligible value claim in respect of these shares.
  • HMRC issued a Closure Notice rejecting the claim, stating that the shares were acquired at a time when the company's value had already become negligible.
  • The taxpayer Appealed the assessments.

The FTT found that:

  • For a Negligible Value claim to be valid, the shares must have become of negligible value whilst owned by the taxpayer.
  • The shares already had negligible value at the date they were allotted. The acquisition cost of the shares was the market value at the time of the loan conversion (negligible).
  • The FTT denied the taxpayer permission to pursue an alternative argument that relief was due for irrecoverable Loans-to-traders, as it was a very late amendment and additional information would have been required.

The appeal was dismissed.

Useful guides on this topic 

Negligible value claims
What is a negligible value claim? When and how can a claim be made?

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

Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights?

How to appeal a tax penalty (subscriber version)
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?

Loss relief (Income Tax) disposal of shares
Share Loss relief allows you to offset a loss made on the disposal of shares against income instead of following normal capital loss treatment.

Limit (cap) on Income Tax reliefs
What are the limits and restrictions for Income Tax relief? When do they apply?

External Links

Abigail Tan v HMRC [2024] TC09112