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Pike v CRC, Court of Appeal
The taxpayer acquired an off-the-shelf company in March 2007. He was the sole director and held 999 of 1 000 issued shares; his wife held one.
The company issued £6m nominal redeemable loan stock that the taxpayer took at par. The certificate stated the business would pay the taxpayer the redemption proceeds on 15 July 2013 – which would include an amount equal to 7.25% a year of the principal amount to be accruing on a daily basis.
The taxpayer transferred the loan stock to a trust in April 2000 and claimed a loss of £3.4m in respect of the disposal.
HMRC refused the claim on the basis the stock was not a discounted security because the sum paid in addition to the £6m was interest. The First-tier Tribunal and Upper Tribunal both upheld the Revenue’s decision. The taxpayer appealed.
The main issue before the Court of Appeal was...
