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Not capital

06 November 2006
Categories: Tax cases
Able (UK) Ltd v CRC

Not capital

The taxpayer company owned land in respect of part of which N Ltd obtained a compulsory purchase order in 1992. The taxpayer received compensation of £2 185 000 from the Lands Tribunal for the loss of use of the land. It said that this should be treated as capital but HMRC said that the sum was income and issued a notice of amendment against which the taxpayer appealed.
The General Commissioners dismissed the taxpayer's appeal. The taxpayer appealed by way of case stated.
In the High Court the judge said that in cases where there had been only a temporary interference with the taxpayer's use of its fixed asset the general rule was that compensation for such interference was likely to be classified as income.
The General Commissioners had been entitled to arrive at the conclusions that they had and...

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