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A client was unsure whether a particular transaction was eligible for capital gains tax deferral relief under the enterprise investment scheme. He wrote giving full details to the Inland Revenue and it confirmed that relief was available. It subsequently turned out that relief was not available, and that should have been obvious to the Inspector from the client's original letter.
A client was unsure whether a particular transaction was eligible for capital gains tax deferral relief under the enterprise investment scheme. He wrote giving full details to the Inland Revenue and it confirmed that relief was available. It subsequently turned out that relief was not available, and that should have been obvious to the Inspector from the client's original letter.
The client's tax return was submitted including the claim for capital gains tax deferral relief and the resultant tax paid. Subsequently it was agreed that the relief was not available, the assessment was revised and the additional tax paid. The Inland Revenue has agreed in writing not to levy any penalty. However, it is still insisting upon interest on the grounds that 'it is charged to recompense the Chancellor for tax paid late in fairness to all taxpayers who have met their liabilities for that particular year by the relevant date'.
Surely the Inland Revenue enticed our client to make an incorrect return and is now seeking to profit from that bad advice? Readers' observations would be appreciated.
(Query T15,816) – Saffron.
